Synchrony Financial: The Overhang That Is

Summary:

- Synchrony is not renewing its long-standing partnership with Walmart so investors are concerned about what this may mean for the company's long-term business prospects.

- The loss of Walmart will have an impact and will likely be an overhang through mid-2019 but I do not believe that this means that Synchrony is a sell.

- I plan to stay long the stock, do you?

Synchrony Financial ($SYF) has been in the news a lot lately. First, Warren Buffett's Berkshire Hathaway ($BRK.A)($BRK.B) announced that it took a stake in the private-label credit card company and then, more recently, Walmart (WMT) announced that it decided to go with Capital One ($COF) over Synchrony after years of being a partner. The Berkshire announcement was obviously positive news for Synchrony and its shareholders but, as you can expect, the stock has been under pressure since the Walmart news hit the wire.

As shown, the stock has been punished since Synchrony announced that it was not going to renew its contract with Walmart on July 26, 2018, but I believe that there are still reasons to remain long SYF.