Why Green Dot Got the Green Light to Rally (GDOT)

Why Green Dot Got the Green Light to Rally

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Green Dot (NYSE: GDOT ) got the green light to rally upwards of 10% after a research report from Jefferies claimed that American Express (NYSE: AXP ) was bailing on its competing Bluebird prepaid cards.

So what: The report indicated that American Express was withdrawing its prepaid cards out of Wal-Mart Stores (NYSE: WMT ) , as they didn't receive a warm reception during a program to test the waters. Jefferies analysts acknowledge that they don't have official word, but its channel checks suggest that AmEx is pulling out.

Now what: That helps allay competitive fears for Green Dot, as its exclusive distribution partnership with Wal-Mart comprises the majority of its sales. As the prepaid-card market has grown, larger rivals in financial services like American Express and JPMorgan Chase have been jumping in, putting a lead on smaller companies like Green Dot. If Jefferies turns out right, then this is definitely good news for Green Dot.

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Fool contributor Evan Niu holds no position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of JPMorgan Chase and American Express. Motley Fool newsletter services have recommended creating a write covered strangle position in American Express and creating a diagonal call position in Wal-Mart Stores. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy

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