What Happened?

Shares of leading edge card issuer Marqeta (NASDAQ: MQ) jumped 10.9% in the afternoon session after sources revealed the company (Marqeta) could be a potential takeover target. The sources added that Mastercard (MA) and Visa (V) could be potential acquirers alongside other private equity firms. Most acquisitions tend to close at a premium, raising the possibility that existing investors could exit their positions at a higher price if Marqeta reaches a deal with a buyer.

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What The Market Is Telling Us

Marqeta’s shares are very volatile and have had 26 moves greater than 5% over the last year. But moves this big are rare even for Marqeta and indicate this news significantly impacted the market’s perception of the business. 

The previous big move we wrote about was 6 days ago when the stock dropped 43% on the news that the company reported highly disappointing third-quarter earnings, as it lowered revenue and gross margin forecasts for the fourth quarter. Q4 2024 guidance indicates net revenue growth of 10% to 12% (vs. previous guidance of 16% to 18%) and gross profit growth of 13% to 15%. (vs. previous est. of 25% to 27%). The magnitude of the guidance cut is quite concerning and had the market questioning the long-term earnings power of the business. 

Management added, "Our fourth-quarter guidance reflects several changes that became apparent over the last few months with regard to the heightened scrutiny of the banking environment and specific customer program changes." 

Overall, this was a very bad quarter, one of the worst this earnings season thus far.

Marqeta is down 40.6% since the beginning of the year, and at $4.05 per share, it is trading 44.8% below its 52-week high of $7.33 from February 2024. Investors who bought $1,000 worth of Marqeta’s shares at the IPO in June 2021 would now be looking at an investment worth $132.55.

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