What Happened?
Shares of leading edge card issuer Marqeta (NASDAQ: MQ) fell
43% in the morning session after the company reported highly disappointing
third-quarter earnings, as it lowered revenue and gross margin forecasts for
the fourth quarter. Q4 2024 guidance indicates net revenue growth of 10% to 12%
(vs. previous guidance of 16% to 18%) and gross profit growth of 13% to 15%.
(vs. previous est. of 25% to 27%).
The magnitude of the guidance cut is quite concerning and
has the market questioning the long-term earnings power of the business.
Management added, "Our fourth-quarter guidance reflects several changes
that became apparent over the last few months with regard to the heightened
scrutiny of the banking environment and specific customer program
changes." Overall, this was a very bad quarter, one of the worst this
earnings season thus far.
What The Market Is Telling Us
Marqeta’s shares are very volatile and have had 25 moves
greater than 5% over the last year. But moves this big are rare even for
Marqeta and indicate this news significantly impacted the market’s perception
of the business.
The biggest move we wrote about over the last year was 9
months ago when the stock gained 11.1% on the news that Bank of America
upgraded the stock's rating from Neutral to Buy. The firm added, "Based on
our analysis of some of MQ's key end-market verticals, as well as the
burgeoning credit opportunity; we believe MQ can grow top line 20%+ in the
medium-term."
Marqeta is down 47.9% since the beginning of the year, and
at $3.54 per share, it is trading 51.7% below its 52-week high of $7.33 from
February 2024. Investors who bought $1,000 worth of Marqeta’s shares at the IPO
in June 2021 would now be looking at an investment worth $116.15.
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