GreenSky Inc. on Tuesday sharply reduced its earnings estimate for the current year, citing an increase in its cost of funds and an expected seasonal dip in loan originations during the fourth quarter.
Shares in the Atlanta-based company plunged by 36% in midday trading, bringing the stock to its lowest level since the firm’s initial public offering in May.
GreenSky
The company’s bank partners, which take the loans onto their books, include Regions Financial, Fifth Third Bancorp and Synovus Financial. On Thursday, GreenSky announced that it added BMO Harris Bank and Flagstar Bank during the third quarter.
GreenSky also said that it is expecting 2018 adjusted earnings before interest, taxes, depreciation and amortization of between $165 million and $175 million. That was well below the range of $192 million to $199 million that the company announced in August.
GreenSky reported third-quarter net income of $45.7 million, up from $38.2 million in the year-earlier period.
Transaction volume rose by 33% to $1.4 billion, and revenue climbed by 29% to $113.9 million. But those gains were partially offset by a 19.2% increase in total costs and expenses.
“As we look ahead, we maintain our heightened focus on innovation, while recalibrating our full year expectations to reflect anticipated fourth quarter seasonal headwinds, coupled with a much steeper yield curve than initially anticipated as we entered the years,” CEO David Zalik said in a press release.
“I continue to be confident in GreenSky’s ability to deliver exceptional growth, profitability and free cash flow,” he added.
