The Big Picture
In what can only be described as a stunning turn of events, today Fiserv revealed a full makeover of its business, announcing new leadership, laying out a revamped operational framework, and resetting financial targets materially lower. In the process, new CEO Mike Lyons, laid bare a series of missteps by past management that included: (1) understating the degree of favorable impact from unsustainable sources (i.e., Argentina) on Fiserv’s financial performance; and (2) making decisions to meet short-term earnings expectations at the expense of longer-term business health and client satisfaction. The reaction by the market has been punitive, with Fiserv shares trading down more than 40%.
The Reset
Fiserv’s reset can be grouped into three categories: (1) refreshed leadership; (2) a new operational framework; and (3) a lowered financial baseline.
Refreshed Leadership. Fiserv named Takis Georgakopoulos (the current COO of Fiserv) and Dhivya Suryadevara (former CFO of Stripe) as Co-Presidents, with Mr. Georgakopoulos overseeing the Merchant business and technology, and Ms. Suryadevara heading up the Financial Solutions segment and leading the sales and operational efforts across Fiserv. Paul Todd, the former CFO of Global Payments, will become Fiserv’s new CFO. Additionally, the company is adding three new members to to its board, including a new Independent Chairman and Audit Committee chair, to replace outgoing members.
New Operational Framework. Fiserv will be exploring the sale of smaller non-critical businesses, consolidating core banking platforms (from 16 to 5), making investments that have been deferred, walking away from short-term revenue initiatives, and implementing an enterprise-wide AI program, incorporating the technology in both its customer-facing products and services as well as the company’s internal functions.
Lowered Financial Baseline. Fiserv is making dramatic cuts to near-term expectations: 2025 organic revenue growth is now expected to be 3.5-4.0%, down from ~10% previously; 2025 EPS of $8.55 at the midpoint is down ~16% from the prior midpoint and down 3% from 2024; and 2025 free cash flow of ~$4.25 billion is down 23% from prior guidance. While not providing formal guidance, Fiserv views 2026 as a transition year (low single-digit organic revenue growth and a modest decline in EPS) to 2027, when the company intends to achieve its new growth algorithm, which includes mid-single-digit organic revenue growth and double-digit EPS growth. According to Fiserv, “we have established a new revenue and earnings baseline consisting of high-quality, structural, largely recurring revenues driven by meeting our clients’ needs and aspirations”
My Initial Thoughts
There’s been a school of thought in Payments that goes like this:
Newer players, with significantly less operational complexity and organically built, modern platforms, including vertical-specific software, will systematically displace legacy players that have accrued operational and platform complexity from past acquisitions:
The new players (not an exhaustive list) are Adyen, Stripe, Shopify, Toast and Square
The legacy players (not an exhaustive list) are Fiserv and Global Payments, which is in the process of acquiring Worldpay, another legacy acquirer
There is a debate as to where Shift4 Payments sits on this spectrum, but my concern has been that Shift4 is increasingly viewed as a legacy player with added complexity from an aggressive acquisition strategy
I am sympathetic to this argument, and certainly believe Adyen, Stripe, Shopify, Toast and Square are superior businesses to Fiserv and Global Payments.
However, my thesis has been that Fiserv and Global Payments are businesses that can still produce durable and attractive organic revenue growth—call it the 6-8% range—with high margins and significant free cash flow. In the context of this view, the stocks seemed highly attractive (to me) across a number of valuation metrics, including earnings and free cash flow.
While I’m not walking away from this mindset altogether, Fiserv’s actions today deal a significant body blow to my way of thinking.
The fear going forward for Global Payments, and potentially Shift4, is that there is a Fiserv-like reset in their futures. And while these companies can put up solid results over the near-term, this risk will hang over them, putting consistent downward pressure on their multiples.
The Numbers
To be quite frank, the numbers for Fiserv, and potentially others, are not important at this point. Yes, EPS of $8 in 2026 (about a 5% reduction from the low-end of the 2025 EPS guide of $8.50-8.60) implies a multiple on earnings of less than 9x for Fiserv. But confidence is severely diminished. And there’s always a debate over what kind of multiple Fiserv deserves even if it is able to reach its new growth algorithm in 2027.
My Positioning and Actions
As of September 30, 2025, Global Payments, Fiserv and Shift4 Payments represented approximately 20%1 of the stock portfolio I manage for capital appreciation. It is important to note that this portfolio complements my investments in equity and bond index funds, money market accounts, high-yield dividend stocks, and certificates of deposit.
Although this might not be the most exciting answer (if you’ve read this far, thank you), but, for now, I’m standing pat, neither buying or selling any shares of Fiserv, Global Payments, or Shift4 Payments. I still believe there is value in these companies, and I don’t think selling at these levels is necessarily prudent, but today has certainly made me reconsider my exposure to them. Here’s my thought process:
In a perfect world, I would lighten up into strength, and repurpose some of my exposure to higher-quality names, including Toast, Adyen and Block. But I remain uncomfortable with the valuations for these companies.
Another alternative may be to forgo exposure to this area altogether, and instead rely on my investment in Visa to play the secular shift from cash and check to digital payments.
As full disclosure, here is what I have written in the past about Fiserv, Global Payments and Shift4 Payments:
Disclosure: Of the stocks mentioned in this report, I am long Visa, Global Payments, Fiserv and Shift4 Payments. I am also long all of the stocks contained in the ‘Top Portfolio Holdings’ chart. This report is for informational purposes only and is not a recommendation to buy or sell any stock. Finally, while I rely on the information in this report to guide my investment decisions, you should not, because I cannot guarantee its accuracy.
Subsequent to September 30, 2025, I bought 50 more shares of Fiserv, bringing my total position to 725 shares.
Unfortunately I knew nothing about this stock 6 months ago and I wish that was still the case. Down $70k today. I had/have mostly short puts @$150. My position sizing all wrong this year. Nibbled on $goog @$150 and all in on $fi.
"But our investments in Argentina will save us!" has to be one of the funniest management commentaries ever made.