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UPDATE: Marqeta (MQ) Stock Drops on Leadership Transition, Downgrade at Wells Fargo

August 11, 2022 8:55 AM EDT
Get Alerts MQ Hot Sheet
Price: $7.44 -0.67%

Rating Summary:
    13 Buy, 5 Hold, 2 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 15 | Down: 30 | New: 23
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(Updated - August 11, 2022 9:42 AM EDT)

Shares of Marqeta (NASDAQ: MQ) are down over 6% after the company announced Q2 results and management changes.

Marqueta reported an adjusted Ebitda loss of $10.2 million, which translates into a loss of $0.08 per share, but still $0.03 better than the analyst estimate of a loss of $0.11 per share. Revenue came in at $187 million, again better than the $179.3 million consensus.

For this quarter, the company said it sees net revenue growth between 36% and 38%, gross profit margin between 43% and 44%, as well as an adjusted Ebitda margin between -8% and -9%.

Moreover, Marqeta announced that the CEO Jason Gardner will transition to the role of Executive Chairman. Moreover, COO Vidya Peters resigned.

Wells Fargo analyst Jeff Cantwell downgraded MQ shares to Equal Weight from Overweight with an $11 per share price target, down from $13. The 4 key reasons behind the downgrade call are:

  1. A 'regime change' of this magnitude will be a challenge for investors to stomach at this point in the cycle;
  2. Revenue growth will slow in 2H22;
  3. '23 looks increasingly opaque in terms of MQ's potential revenue and EBITDA generation; and
  4. We see an eventual renewal with Block weighing on MQ's take rate.

“We do like the L-T story—but this is a material management transition, plus the fundamental backdrop looks like it is weakening from here,” Cantwell concluded.

Morgan Stanley analyst James Faucette remains Overweight-rated on MQ shares as he is still positive on medium-term growth trajectory.

“We’re still highly constructive on MQ's compounding TPV trajectory given ongoing elevated investment,” the analyst told clients.

By Senad Karaahmetovic



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Morgan Stanley, Wells Fargo, Senad Karaahmetovic