What Happened:
Shares of leading edge card issuer Marqeta (NASDAQ: MQ) fell 7.69% in the after-market session after the company reported first quarter revenue and adjusted EBITDA that exceeded analysts' expectations. However, EPS missed, gross margin deteriorated, and cash burn increased. Revenue guidance for the next quarter also missed Consensus while adjusted EBITDA guidance beat. To add more color to the profitability guidance, management noted that " it will accelerate the realization of its efficiency goals and take restructuring actions in Q2 to reduce operating expenses by $40-$45 million on an annual run rate basis." Despite the encouraging profitability outlook, the overall results were mixed.
What is the market telling us:
Marqeta's shares are quite volatile and over the last year have had 60 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business. The previous big move was about one month ago, when the company gained 7.69% on the news that analyst Darrin Peller of Wolfe Research upgraded the stock from Peer Perform (Hold) to Outperform (Buy), stating that the stock’s risk profile is too attractive to overlook and the market is undervaluing the business.
Marqeta is down 26.2% since the beginning of the year, and at $4.33 per share it is trading 62.7% below its 52-week high of $11.62 from June 2022. Investors who bought $1,000 worth of Marqeta's shares at the IPO in June 2021 would now be looking at an investment worth $141.87.
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