Investors usually associate the megatrend fintech with young start-ups that are driving the digitalization of the financial world with their applications. However, there are also companies with a long tradition in this emerging sector. Synchrony can look back on a history of almost nine decades. In 1932, the US industrial group General Electric set up its own financing division. Its purpose was to make it easier for customers to buy household appliances. Over time, this initiative gave rise to various financial services for consumers. These include, in particular, private label credit cards, an area in which Synchrony is now the leader in the USA. In addition, there is a wide range of payment and financing programs. Synchrony Financial has been listed on Wall Street since 2014 - in the year following the IPO, GE separated completely from the subsidiary.
During its relatively short stock market history, Synchrony has experienced handsome swings. At the beginning of 2018, the stock peeked above the USD 40 mark for the first time. The financial stock was unable to hold this level for long. When the Corona sell-off hit Wall Street just over a year ago, the stock plummeted to USD 12.16. At that point, Synchrony was trading at just over half its IPO price. A v-shaped recovery followed. In the meantime, the stock is trading at more than three times the low. However, resistance in the USD 40 area has recently made life difficult for the bulls once again. After a strong bounce in January, Synchrony is now in the process of getting over this hurdle again. The latest run-up started after the group presented its financial statements for the fourth quarter of 2020.
While both the average number of active accounts and total outstanding loans receivable trended downward. Nevertheless, at USD 1.24, earnings per share exceeded the previous year's figure by almost a tenth. Analysts on average had only expected Synchrony to post a profit of USD 0.91 per share. CEO Margaret Keane didn't just use the Corona period to cut costs. She simultaneously drove the digitization of the company. More than half of the transactions processed in the retail credit card business were online purchases in the final quarter. Of the total amount of all payment settlements, almost two-thirds were made digitally. In terms of mobile apps, Synchrony saw growth of just under one-fifth at the end of 2020. The company could sign deals with seven new partners. For example, the US compact equipment manufacturer Bobcat has recently started using Synchrony's services.
Operationally, things are going well for the company from the US state of Connecticut. Nevertheless, it remains to be seen whether Synchrony shares will actually make it over the chart hurdle at USD 40. In the event of a slowdown in momentum, two new softcallable barrier reverse convertibles could play to their strengths. Due to the relatively high volatility of the S&P 500 member, the issue offers double-digit coupon payments in percentage terms. In the trading currency CHF, the quarterly payout is 11.00% p.a.. Investors who invest in USD can expect 100 basis points more. Leonteq fixes the barrier at 59% of the initial level, regardless of the product value. As long as Synchrony does not dip to or below this level during the 15-month term, nothing stands in the way of maximum returns.
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