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This Stock Could Be a Surprise Growth Pick in 2022

This Stock Could Be a Surprise Growth Pick in 2022
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Not all of the initial public offering shares made it to the business. Issuance of the financial card market (NASDAQ: MQ) It went public in June at the very beginning of its old streak that has continued to fade, and has since lost 45% of its value.

The drop in prices is intriguing, given the investment community’s love of fintech and Marqeta’s strong results. Given its performance, this stock remains below Wall Street’s radar, but with its solid prospects and efficient business execution, it could be a surprising pick for growth for 2022.

Image source: Getty Images.

A powerful and relevant financial technology company

Jason Gardner, CEO of Marqeta, started the company in 2009 at a time when the concept of fintech was gaining momentum. Old credit card platforms didn’t support technological innovations, and he felt he could start an easy-to-use, fast-moving, customizable system to enable a range of credit card functions — and Marketa was born.

Marqeta is a technology-driven credit card infrastructure platform that offers customizable credit card solutions. It works through an API plug-in, so customers can integrate it into their systems and seamlessly connect to the Marqeta network. The platform deals with the connection to the processing network, such as Visa The issuing bank for quick and easy transactions.

This model is aimed at corporate customers, who may have different credit card needs than standard credit cards issued by banks. Some end users are employees, others are customers. Some of its clients include to forbid (formerly Square), Confirmed collectibles, And Uber. Some of the features it offers include instant payments and expense cards for employees with virtual spending controls, which are important to companies like Uber, whose drivers need to be able to quickly pay for orders. Another example is the alphabetGoogle Pay, which partners with Marqeta to operate a token virtual card for users with which Google Pay credits can be spent.

Why was Marketa defeated in 2021?

For the two quarters (ended June 30 and September 30) in which Marqeta reported earnings as a public company, it has done well for itself.

Measure Q 2 Q3
he won 122 million dollars $132 million
Year-on-year revenue growth 76% 56%
earnings per share (EPS) (0.29 USD) ($0.08)

Data source: Marketa quarterly reports.

In both quarters, revenue growth exceeded analyst expectations. Another important metric, the total volume of payments, is growing at similar rates to revenue. The loss per share came in well below analysts’ average expectations of $0.07 in the second quarter, but it beat expectations of $0.14 per share in the third quarter.

So why all the negative stock prices? For one thing, losses are increasing, and the company’s valuation is high. It is typical for losses to accumulate as new businesses grow; The emphasis is on expansion more than on generating profits. But investors would like to see losses decrease over time, not increase, which they did in the second and third quarters. As for the valuation, the shares are trading at a price 19 times higher than sales, even at the low price. Although it has grown at a reasonable rate, the revenue is still small, and may not support the current valuation. Finally, fintech as an industry hasn’t been doing well lately, as the omicron variant of the coronavirus is making its rounds, and some areas of the country have implemented new restrictions.

Where will Marketa go in 2022?

Marketa has announced some exciting developments lately. It has many partnerships with cryptocurrency companies, and it brings the right technology to enhance crypto vision. For example, he plays a card with Coinbase Global It allows holders of cryptocurrency wallets to use their balances for retail payments. Also recently instrument a deal with Bill.com Which provides enterprise-wide services to small and medium-sized businesses through its infrastructure. It also has international opportunities, and the number of European customers doubled year on year in the third quarter.

The real surprise is that Marketa hasn’t excited investors yet. The administration sets its addressable market in “modern card issuance” at a whopping $30 trillion, and while its focus varies somewhat, its services can veer too far in the grip of leaders like Visa and American Express You have credit card solutions. And he can also work with them, like partnering with them Master Card Credit Card To support its “Buy Now, Pay Later” platform. “Marketa can broaden the range of new entrants to this market and innovate more than the old platforms,” says Gardner.

Owning a Marketa stock is still risky for the above reasons – high valuation, unprofitable, and in the midst of a global pandemic. But the future looks very bright, and as it grows and becomes more stable, it could be a big winner in 2022.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Consulting Service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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