By Marqeta (MQ) experienced a significant boost in its stock value following the announcement that it had successfully renewed its contract with Block to provide services for its Cash App debit card. Pre-market trading on Wednesday saw Marqeta’s stock rise by 20% to $5.96. Throughout this year, the stock had previously declined by 19%.
In its second-quarter earnings report, Marqeta revealed that it had signed a four-year extension of its contract with Block (SQ), a development that garnered positive attention from investors eagerly awaiting this news. The company expressed its belief that this renewal showcased the value that Block recognizes in the Marqeta platform and the strength of their partnership, attributing it to Marqeta’s flexibility, innovation, and comprehensive range of services.
Renowned William Blair analyst, Robert Napoli, holds an optimistic outlook for Marqeta and rates the stock as “Outperform” with no specific price target. Napoli emphasized in a research note that the contract renewal with Block has eliminated a significant concern that had been impacting the stock’s perception, referring to it as a “major overhang.” With the renewal now behind them, Marqeta has not only diversified its offerings by introducing credit card issuing capabilities but also boasts a formidable balance sheet.
During the second quarter, Marqeta reported a loss of 11 cents per share while generating $231 million in revenue. This performance surpassed analysts’ expectations, as they had predicted a loss of 10 cents per share on sales of $219.5 million, according to FactSet. Truist Securities analyst Andrew Jeffrey echoed the positive sentiment surrounding Marqeta, rating the stock as a “Buy” with a price target of $8. He expressed relief that Marqeta successfully renegotiated its contract with Block, noting that while the renegotiation process had some challenging aspects, it ultimately streamlined Marqeta’s financial structure and alleviated concerns about their relatively low gross margin percentage.
Comments