Compass Point on Green Dot (GDOT): Increased Competition In Prepaid Warrants Caution

Compass Point on Green Dot (Nasdaq: GDOT): Increased Competition In Prepaid Warrants Caution

Analyst, Douglas Greiner, said, "Competitors with more abundant resources are increasingly challenging stand alone prepaid vendors Green Dot (Nasdaq: GDOT)(Neutral, $30PT) and NetSpend (Nasdaq: NTSP)(Neutral, $8PT) - warranting caution."

"According to Western Union (NYSE: WU)(Neutral, $20PT), global prepaid GDV is expected to increase 20% compounded annually through 2015 to $628 billion resulting in a $13-$20 billion potential revenue opportunity. Green Dot and NetSpend's combined 2011 total revenue was only $775 million. Given (1) the magnitude of the global opportunity and (2) that much of it remains untapped, competition is building."

Greiner mentioned that American Express (NYSE: AXP) (not covered) is expanding into the prepaid market and JPMorgan (NYSE: JPM) (not covered) has began offering prepaid cards at over 200 branches. Also, Moneygram (NYSE: MGI)(Neutral, $18PT) reported that it's most recent quarter has experienced increased volume in it prepaid network.

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