What Happened?
Shares of leading edge card issuer Marqeta (NASDAQ: MQ) jumped 23.5% in the morning session after the company reported stunning fourth-quarter results, significantly surpassing analysts' expectations for operating profit. Total payment volume also exceeded Wall Street estimates, and revenue guidance for the next quarter came in ahead of expectations, with projected growth of 14-16%, signaling continued momentum in 2025. Marqeta also highlighted the acquisition of TransactPay, which strengthens its position in Europe and enhanced its ability to provide card issuance and payment solutions across the region. Zooming out, we think this was a good quarter with some key areas of upside.
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What The Market Is Telling Us
Marqeta’s shares are quite volatile and have had 17 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 4 months ago when the stock dropped 43% on the news that 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.
Marqeta is up 13.4% since the beginning of the year, but at $4.23 per share, it is still trading 42.3% 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 $138.60.
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