Is Discover's Recent Guidance a Red Flag for Investors?

Discover Financial Services (NYSE: DFS) recently surprised investors with its guidance for 2023 when it said net charge-offs would move above pre-pandemic levels and exceed what Wall Street had expected. Investors were left questioning whether this was a sign that consumers were struggling and if it spelled trouble for the broader economy. Discover reported a solid fourth quarter, with net revenue up 27% year over year while diluted earnings per share grew 4%.