Fintech stocks, ADP, Waste Management: Trending Tickers

Shares of fintech companies PayPal (PYPL), Affirm (AFRM), and Block (SQ) traded lower amid broader concerns about consumer spending trends. The sell-off came after shares of French firm Worldline (WLN.PA) plunged nearly 60% after reducing its guidance and scrapping growth targets, attributing it to Europe's economic downturn and cybercrime risks.

Shares of payroll processor Automatic Data Processing (ADP) fell despite a 7% revenue increase. The company presented mixed third-quarter earnings, narrowly missing on revenue estimates.

Waste Management (WM) shares rose after raising its free cash flow forecast for the year. Although WM reported weaker-than-expected third-quarter revenue, investors focused on improved margin performance that offset revenue weakness.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Video Transcript

JULIE HYMAN: Well, let's get to some movers that we are watching today now, some trending tickers. We've got the fintech stocks that are trading lower today. PayPal and Block both under pressure. Affirm also selling off today. And this has to do with the French company called Worldline that is in the same space. Now, some of Wordline's issues are specific to itself, but Worldline shares were down 59%. That is a record single-day drop, after the company lowered its outlook for the year. It scrapped growth targets, and it cited Europe's economic slowdown and the risks of cybercrime.

Now, basically, what this did was highlight concerns that are out there in the market about spending patterns on the part of consumers. Even though you had the likes of something like Visa's numbers looking relatively strong, there are still these concerns lingering for fintech in particular.

JOSH LIPTON: Yeah, and you point out, Worldline does face, we should note, some unique challenges, right? I mean, Bloomberg pointing out their largest market is Germany, which is facing a possible recession. So there are some unique things here.

But broadly, the sector is facing some challenges. The e-commerce boom we saw during COVID, that has faded. Rising rates is another challenge. And the damage is intense. I mean, PayPal down 30% this year. Block is down about the same. Affirm, though, bucking the trend. Max Levchin's company is up about 70%. But overall, for this sector, there are these headwinds they're trying to navigate.

JULIE HYMAN: Right, and over the past week or so, we've definitely seen these stocks continue to sell off because higher rates are just like a headwind for most of what we're talking about.

JOSH LIPTON: Exactly right.

JULIE HYMAN: Particularly for this sector.

JOSH LIPTON: All right, moving on, I'm also going to check out shares of Automatic Data Processing, down today after the company reported a mixed earnings report. You can see it's down hard, actually, about 9%. So on this one, Julie, revenue grew 7%, but that did miss estimates. Total expenses were also about 7% to 4.51 billion. That-- and for fiscal '24, they do see adjusted EPS being 12-- 10% to 12%. Revenue growth, they're looking for between 6% and 7%.

Bears don't think much of what they see here. No surprise, right? They have sells on it. But Evercore is one example. They've got an underperform on the name. They say continued deterioration will likely be driven by a worsening macroeconomic backdrop. Most on the Street, we should note, though, are at a hold, more than 60%. The stock now, though, now firmly in the red year to date.

JULIE HYMAN: Yeah, and basically, this seems to be a reflection of the slowing job market, right? But given that we continue to see a lot of job numbers beat estimates, it's kind of interesting here that ADP is reporting this. And you have to ask the question, are there sort of forward-looking indications about what's going to be happening with the job market? I mean, I think economists, broadly, are predicting an uptick in unemployment, as the Federal Reserve's rate increases continue to bite. So maybe this is sort of the tip of the spear, as it were, letting us know, or the canary in the coal mine. I don't know. Mixed metaphors. You get the idea.

JOSH LIPTON: No, I get where you're going.

JULIE HYMAN: Is this telling us that there is definitely more trouble to come?

JOSH LIPTON: Yeah. All right, well, we'll keep our eye on it.

JULIE HYMAN: Yeah. Let's also keep our eye on Waste Management. It's one of the best performers in the S&P 500 right now, up 6% following its earnings. The company reported third quarter results that did feature weaker than expected revenue, but it did raise its full year forecast for free cash flow. So hence we see the stock moving higher here. Waste Management one of the biggest waste management companies in the country here.

And analysts here are looking at better margin performance, according to the likes of Oppenheimer, and that that more than offset lower revenue. So basically managing expenses better and also, though, seeing some commodity impacts that did not help the company. So interesting here. Again, Waste Management stable, but also maybe a bit of a bellwether, right, when you look at trash as a proxy for economic growth.

JOSH LIPTON: If you want to get defensive, you move to waste stocks. That could be it.

JULIE HYMAN: Yeah, you do--

JOSH LIPTON: Perhaps, right?

JULIE HYMAN: You do see some of that traditionally.

JOSH LIPTON: I mean, I think to your point, so Q3 profit beat. Revenue rose about 2%. That apparently was kind of short versus what the Street was looking for, but as you noted, Julie, I think one thing that investors are really concentrating on here, the company expects free cash flow for 2023 between 1.83 and 1.93 billion, and that was raised.

JULIE HYMAN: Yeah, exactly. Now, the waste management companies tend to have, well, a decent dividend yield. Theirs, though, is 1.7%. So, not huge here, drawing investors in, in terms of that.