What Happened:
Shares of leading edge card issuer Marqeta (NASDAQ: MQ) jumped 11.1% in the morning session after 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."
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What is the market telling us:
Marqeta's shares are quite volatile and over the last year have had 26 moves greater than 5%. But moves this big are very rare even for Marqeta and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 6 months ago, when the stock gained 22% on the news that company reported second quarter results that beat analysts' expectations for TPV (total processing volume) and revenue. Adjusted EBITDA also beat by a meaningful amount. In addition, the company announced it agreed to a four-year extension with Block to continue powering the Cash App card product effective on July 1, 2023, through June of 2027.
On the other hand, its gross margin deteriorated, and the company continued to burn cash. Overall it was a positive quarter for the company, with top and bottom line metrics beating expectations. Investors are also likely excited by the potential inherent in the extended deal with Block.
Marqeta is down 9.6% since the beginning of the year, and at $6.16 per share it is trading 13.8% below its 52-week high of $7.14 from December 2023. Investors who bought $1,000 worth of Marqeta's shares at the IPO in June 2021 would now be looking at an investment worth $201.71.
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