Capital One Financial in McLean, Va., took a beating in the stock market Friday, the day after it reported dismal second-quarter results and announced a wave of layoffs.
The company's stock price dropped by more than 13% on the first day of trading after it announced that its second-quarter profit fell 28% from the year before, badly missing analysts' estimates.
The sell-off stood out even on a bad day for bank stocks, with the KBW Nasdaq Bank Index losing 1.68% on Friday.
Capital One's free-fall came amid reports that the $311 billion-asset company plans to lay off staff across the country and close two call centers, one in South Dakota and the other in Oregon, by the end of the year. Those two closures would cut Capital One's headcount by 1,650, the Richmond Times-Dispatch reported Thursday.
The firm, best known for its credit card business, announced the layoffs in a statement Thursday. The statement did not say how many employees would be laid off or what parts of the company would be affected. Capital One took a $147 million restructuring charge in the second quarter "related to the realignment of our workforce," the company said.
Capital One representatives did not immediately respond to emails seeking further details Friday.
The layoffs could be moves to balance out the company's recent hiring binge, which has been costly. Capital One's salaries and benefits jumped by 21% in the second quarter, and its headcount increased by 7%, to 47,500. Those costs helped push Capital One's quarterly overhead up 12%, to $2.8 billion.
The hiring is part of Capital One's effort to focus more on developing new technology, the company said. Chief Executive Richard Fairbank said Capital One is investing more in digital initiatives, but did not specify the dollar amount the company plans to spend. The company has made several acquisitions in Silicon Valley in recent months.
Card growth and digital technology represent "two very, very big opportunities" for the company, and both "involve spending money to make more money later," Fairbank said on a conference call with analysts Thursday.
Capital One is "bringing in top engineers, product managers, designers, data scientists often from tech companies and startups outside of financial services," he said. "And this is a very important thing and obviously it costs money to do that, but that's a foundational thing."