Marqeta reported second-quarter revenue above Wall Street estimates.
David Paul Morris/Bloomberg
Shares of
Marqeta
soared Wednesday after the digital payment technology company announced it had renewed its contract with
Block
to power its Cash App debit card.
Marqeta
(ticker: MQ) stock jumped 17% Wednesday to $5.82 and was on pace for its largest percentage increase since May 2022, according to Dow Jones Market Data. The stock has gained 4.8% this year.
Marqeta
said in its second-quarter earnings report after the closing bell on Tuesday that it had signed a four-year extension of its contract with Block (SQ), which was a positive for investors who were awaiting this news.
“We believe this renewal demonstrates the value Block sees in the Marqeta platform and this partnership, exemplified by Marqeta’s flexibility, innovation and breadth of service,” the company said in its earnings release.
William Blair analyst Robert Napoli is bullish on Marqeta. He has an Outperform rating on the stock without price target. Napoli wrote in a research note that the contract renewal with Block removes a “major overhang” for the stock.
“Many investors viewed the company as uninvestable due to the heavy concentration with Block and the upcoming contract renewal. Marqeta now has the renewal behind it, it has added the ability to do credit card issuing, and has a very strong balance sheet,” Napoli wrote.
Marqeta reported a second-quarter loss of 11 cents a share on revenue of $231 million. Analysts surveyed by FactSet were expecting the company to report a loss of 10 cents a share on sales of $219.5 million.
Truist Securities analyst Andrew Jeffrey rates the stock as a Buy with an $8 price target. He said he was “relieved” Marqeta was able to renegotiate its deal with Block.
“Even though the recent Cash App renegotiation is messy, we think it makes Marqeta’s financials more uniform and the new revenue structure tamps down some investors’ concerns about relatively low gross margin [percentage],” Jeffrey said.
Write to Angela Palumbo at [email protected]
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