The global credit crunch took its toll on Western Union on Tuesday, shaving nearly $3 billion in market value from the money- transfer leader after it tempered financial expectations.
Western Union shares fell $3.63, or 17.8 percent, to close at $16.75, their worst daily decline since the company spun off from First Data Corp. more than two years ago.
Until recently, Western Union appeared relatively immune from the credit crunch, managing to grow as competitors faltered.
Through Monday, its shares were up 10 percent over the past 12 months, compared with a 34 percent decline in the S&P 500.
“Transaction growth rate held strong, and the revenue growth this quarter was solid,” said chief executive Christina Gold.
But in a message that did not sit well with analysts, the company said revenue growth of 9 percent to 10 percent was more likely than the double-digit growth rates offered in June.
Transaction growth remains strong in India and the Philippines. But revenues are declining in the U.S. and faltering in China, a market where Western Union has invested heavily.
“We are especially concerned over the sharp drop-off of growth in China and the removal of long-term guidance,” commented Daniel Perlin, a senior analyst with Wachovia Capital Markets, in a research note.
The credit crunch has hit the company in other ways, including locking up $300 million of cash in a supposedly safe money-market fund that failed after investing too heavily in Lehman Brothers debt.
Uncertainty has also caused investors to favor the U.S. dollar again, creating volatility in currency hedges the company relies on.
Western Union’s revenues rose 10 percent in the third quarter to $1.38 billion. Third-quarter income rose 11 percent to $240.8 million, or 33 cents per share.
