Discover Financial (NYSE:DFS) stock is falling on Thursday after the financial services company revealed it’s undergoing a regulatory review.
According to a press release from Discover, this review is connected to how the company classified certain merchant cards. The problem starts in 2007 when it accidentally added these cards to its highest tier. The company says this mistake accounts for less than 1% of its revenue.
As a result of this, Discover has an external law firm handling an investigation into the issue. This firm is working alongside the Audit Committee of the board of directors, and that investigation is still ongoing.
To go along with this, Discover has announced a pause to its share buyback program. The company says that this pause will remain in place while it continues to evaluate the internal review of compliance, risk management, and corporate governance.
Earnings Drag Down DFS Stock
Discover also released earnings for the second quarter of 2023 today. Unfortunately, those results didn’t impress investors. That includes its earnings per share of $3.54 and revenue of $3.88 billion. Both of these are below Wall Street’s estimates of $3.69 per share and $3.89 billion.
Roger Hochschild, president and CEO of Discover, said the following in the earnings report:
“We are actively enhancing our governance and oversight structures and are making significant investments in our compliance management system. We remain deeply committed to achieving excellence in all these areas.”
DFS stock is down 12.5% as of Thursday morning.
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
