Marqeta: Analysts See Over 50% Upside Potential

Card-issuing company Marqeta (MQ) had an outstanding quarter. Due to the battering MQ stock has received along with the rest of the tech sector, Marqeta’s stock forecast seems hard to comprehend.

However, even if you take the current market turmoil out of the equation, the company is trading at depressed multiples versus its value proposition. I am bullish on the stock.

Even though Marqeta stock has shed 50% since its IPO last year, it continues to see fast revenue growth. Revenue for Q4 rose from $86.2 million to $155.4 million, an over 80% increase from the year-ago period.

Marqeta provides a low-cost solution for business owners to accept credit card payments online, in person, or over the phone. Its proprietary algorithms and machine learning techniques allow it to process transactions quickly and securely, with no additional fees.

Marqeta is bringing new forms of payment options to the global market. MQ is also disrupting the market by leveraging partnerships with innovative firms, quickly becoming huge in traditional banking areas. Marqeta has a strong licensing strategy, which should help drive future growth.

The company has made its mark on the global payments industry by providing a solution that can easily integrate into any business model and process without changing its IT infrastructure.

Blowout Quarter Highlights Marqeta’s Strengths

Marqeta is a digital payments company that offers a complete solution for merchants to accept credit card payments online.

It has been experiencing an earnings season that has been nothing short of incredible. MQ announced its fiscal fourth-quarter earnings and has seen its revenue jump more than 80% year-over-year.

Revenue of $155.4 million beat analyst estimates of $137.8 million; It increased due to an increased total processing volume (TPV) of $33.0 billion, which was $18.7 billion a year earlier.

The company experienced a net loss of $36.8 million for this quarter, or $0.07 a share. Compare that to last year when it logged a loss of $13.8 million, or $0.11 per share. Loss estimates were in line with industry consensus.

Marqeta posted a year-over-year improved adjusted EBITDA of $1.2 million, which is much better than the previous year’s loss of $2.6 million and handsomely above analyst estimates.

Marqeta estimates that it’ll see 48% to 50% growth in revenue in its first quarter. However, it also estimates that its EBITDA margin would fall between -8% and -9%.

“Our approach in 2022 will be more balanced between fueling our existing customers’ success and building for the future,” Jason Gardner, the CEO of the company, said on the earnings call.

Expansion Plans Will Bolster Marqeta Stock Forecast

The global payments industry is growing and changing rapidly with the rise of digital payments, e-commerce, and online shopping.

The global payments industry is constantly evolving to meet the needs of its customers. With new technology comes new opportunities for growth in this fast-paced industry.

Off of this backdrop, Marqeta has a ton of opportunities to grow. Marqeta has obtained certifications in Singapore, the Philippines, Thailand, and 39 different countries as of January 2022. However, Marqeta processes under 1% of carded volume in America. The share is even less when you look at the international figures.

The company is also focusing on increasing its number of offerings, including credit and banking-as-a-service. These segments are not contributing much to the bottom line. Yet, with time they can grow to a substantial part of its portfolio.

The Expense Management vertical grew to nearly $2 billion in total payment volume in the fourth quarter. This was a major difference from the year-ago quarter, where it wasn’t contributing much.

Meanwhile, Marqeta is aggressively increasing its partnerships with established financial enterprises. For example, Citigroup (C) is partnering with Marqeta on its corporate credit cards. Citi will implement tokenization technology so that its employees can have a personalized card.

This technology eliminates the hassle of individuals managing assets on the private chain and saves time for the company. It also makes it easier for both parties & provides a lot of value.

All in all, Marqeta will benefit from its partnerships as it looks to expand into other regions.

Wall Street’s Take

For now, the sentiment surrounding Marqeta is decidedly bullish. Shares of the card issuing business have a Moderate Buy consensus rating, based on six Buy ratings, four Holds, and one Sell assigned over the past three months.

The average Marqeta price target of $17.18 implies an upside potential of 53.3%, which means Marqeta is a good stock for those looking for growth without sacrificing quality at its current valuation.

The Bottom Line

The Marqeta stock forecast points to tremendous upside potential for investors. The tech selloff has made shares of the company very enticing.

Marqeta is reinventing payments, partnering with leading companies on new products and innovative channels to support global innovation. The company recently entered the traditional banking sector and is committed to redefining how international payments are made.

Overall, Marqeta will continue to grow and diversify to an increasingly international audience. MQ is likely to see significant stock price gains with continued innovation over the next few years.

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