Marqeta slumps 20% after earnings; JPM downgrades on near-term headwinds

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By Senad Karaahmetovic 

Marqeta (NASDAQ:MQ) shares tumbled more than 20% in pre-market Wednesday after the company reported Q4 results and gave a forecast for the first quarter.

The company reported a loss per share of $0.05 on revenue of $203.8 million, beating the consensus for a loss per share of $0.10 on revenue of $201.9M. The adjusted EBITDA margin came in at -4%, better than the expected -5.8%.

"We are entering 2023 uniquely positioned to capture the massive opportunity in embedded finance. Our cloud-native and API-first platform offers a fully bundled offering - debit, credit, risk, money movement and program management tools, making it seamless for our customers to embed financial services into their own products," said Simon Khalaf, CEO of Marqeta.

For this quarter, the company expects its revenue to increase between 26-28% while the adjusted EBITDA margin is seen between -5% and -6%, worse than the expected -3.2%.

JPMorgan analysts downgraded the stock to Neutral from Overweight with a price target of $6 per share, down from the prior $9.

"While we like the strategic value and long-term operational improvements being put in place at Marqeta, we feel it is time to move to the sideline on the stock given trade-off of lower near-term growth with longer-term certainty due to stepped up renewals including Visa that surprised us to the downside," the analysts said in a client note.

Wolfe Research analysts also said the company is facing "too many near-term headwinds," which offset long-term potential.

"MQ's 4Q results were in-line on revs and beat on EBITDA. However, guidance was below due to contract renewals and network incentives. These factors are overshadowing a normalized mid-20%+ GP growth rate, and investors likely need to see more to regain confidence," the analysts said.