After months and months of nothing more than declines, the stock price of Marqeta (MQ) is finally showing some light. The strong headwinds of the crisis in Ukraine have not deterred Marqeta, whose shares are roughly at the same levels seen in early February.
Could this be a sign that the market is slowly gaining confidence in this stock? There are reasons to believe this and support the thesis of more upside in the share price. So as things stand, I am bullish about Marqeta.
Since the stock price doesn’t even look expensive based on some technical indicators, there are additional points to add to the merit of this stock.
About Marqeta
Marqeta operates a card issuance platform for creating customized and innovative payment cards.
Marqeta’s payment infrastructure enables customers to perform the following activities: launch and manage their own card programs, issue cards, and authorize and complete payment transactions.
Headquartered in Oakland, California, Marqeta states it is certified to operate in 39 countries around the world.
Marqeta Stands Out amid an Overall Bearish Context
Currently, the market is facing strong headwinds due to severe issues such as the war in Ukraine, record inflation, and a high risk of stagflation, making it very difficult to counteract.
Among the technology stocks, which have been hit very hard by the market headwinds so far, are those that don’t intend to weather the storm but continue to fuel their shareholders’ growth expectations, as Marqeta does.
I think investors will soon be able to bet big on Marqeta.
Marqeta’s Fast-Growing Market
Marqeta is active in the fast-growing digital payment solutions market, which will grow by 20.5% each year from 2022 to 2030, according to Grand View Research. Growing customer appreciation for real-time payments will be the biggest contributing factor to market expansion.
The next expansion of the digital payments market should create opportunities for a wide range of operators, including Marqeta, and not just for more established names.
The turning point came during the COVID-19 crisis when budget limits for contactless payments were increased to ensure social distancing at the time of payment.
The rise of anti-fraud technologies has enabled global regulators to allay more concerns about using digital payments to regulate transactions between merchants and consumers worldwide.
Marqeta’s Trends
Marqeta appears to fit well in this context of renewed growth, as evidenced by encouraging trends from its Q1-2022 earnings report.
Market participants are increasingly gaining confidence in the payment technology of the software application company based in Oakland.
Thanks to a strong increase in payment volume ($37 billion in Q1 2022 versus $33 billion in Q4 2021), Q1 2022 revenue of $166 million was 53.7% higher than the previous year, surpassing the analyst median of $161.3 million.
It posted EPS -$0.11 against the consensus of -$0.08, but this doesn’t really count at this point, as it’s a normal consequence of heavily investing in safe trades and customer-oriented solutions.
In May, Marqeta announced a series of strategic partnerships with the below-mentioned companies to expand its program management capabilities and offerings in Europe and the United Kingdom.
These partners are Evolve Bank, a provider of various technology-based financial services, Alviere, a provider of solutions for the implementation of various financial services, and Klarna, the issuer of the Klarna Card. This is a Visa (V) card that can be used to make in-store and online purchases and pay at a later date.
Furthermore, on June 7, Marqeta announced a partnership with U.S. global money movement and payment services provider The Western Union Company (WU). The goal of this partnership is to integrate Marqeta’s solutions with the e-wallet and e-banking platform of Western Union for European transactions.
The Outlook
The company’s goal now is to increase visibility and carve out its context in a global market that promises to be very profitable in the future. The significant improvement in the total payment volume (+53% year-over-year), what really matters at the moment, indicates Marqeta should be on the right path.
Expected strong growth in retail e-commerce (up 50% over the next four years to $7.4 trillion by 2025, Statista estimates), along with the development of digital payments, should provide valuable support to the growth project of Marqeta.
Wall Street’s Take
In the past three months, 10 Wall Street analysts have issued a 12-month price target for Marqeta. The stock has a Strong Buy consensus rating based on nine Buys, one Hold, and zero Sell ratings.
The average Marqeta price target is $13.45, implying 40.3% upside potential.
Valuation
Shares are changing hands at $9.59 as of the writing of this article for a market cap of $5.2 billion, a price-to-earnings ratio of -24.7, a price-to-sales ratio of 9.1, and a 52-week range of $6.05 to $37.90.
Also, the 50-day moving average is $10.00, while the 200-day moving average is $16.53. So, the stock looks cheaper today than it has in the past few weeks. Given its affordable price and growth prospects, I think this stock is attractive despite the current headwinds in the market.
Conclusion
Marqeta has now been in uptrend mode for three months. This could be a sign that this stock is making its way into the good books of market traders.
Positive trends on some metrics, attractive portfolio additions, and a favorable outlook for the market suggest that this stock could have strong growth potential that the market is already evaluating favorably.
