In This Article:
What Happened?
Shares of leading edge card issuer Marqeta (NASDAQ: MQ) fell 43% in the morning session after 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 has 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.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Marqeta? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Marqeta’s shares are very volatile and have had 25 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 biggest move we wrote about over the last year was 9 months ago when the stock gained 11.1% on the news that Bank of America upgraded the stock's rating from Neutral to Buy. The firm added, "Based on our analysis of some of MQ's key end-market verticals, as well as the burgeoning credit opportunity; we believe MQ can grow top line 20%+ in the medium-term."
Marqeta is down 47.9% since the beginning of the year, and at $3.54 per share, it is trading 51.7% 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 $116.15.
Today’s young investors likely haven’t read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.