Why Alliance Data Systems Stock Popped Today
Shares of Alliance Data Systems (NYSE: ADS) have popped today, finishing with gains of 10%, after the company reported first-quarter earnings results. The loyalty and marketing specialist also suspended its 2020 guidance due to ongoing uncertainties related to the COVID-19 pandemic.
Revenue in the first quarter increased 4% to $1.4 billion because the impacts from the novel coronavirus outbreak didn't arrive until March. However, the bottom line took a substantial hit, as the company had to increase its loan loss reserves due to deteriorating macroeconomic conditions and the adoption of the current expected credit losses (CECL) methodology as of Jan. 1. The company's provision for loan losses increased by $404 million, which led to net income plunging 80% to $30 million, or $0.63 per share. Adjusted EBITDA fell by more than half to $194 million.
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Source Fool.com
