Each week, Industry Focus: Financials host Jason Moser and Fool.com contributor Matt Frankel, CFP, discuss one stock that's on the top of their watchlists. In this edition, find out why Frankel has his eye on Green Dot (NYSE:GDOT) after the company's third-quarter earnings report, and why Moser thinks Eventbrite (NYSE:EB) is worth a closer look.
A full transcript follows the video.
This video was recorded on Nov. 12, 2018.
Jason Moser: Matt, as always, let's wrap up the show with One to Watch. What's the stock that has your interest this coming week?
Matt Frankel: I've talked about it a few times. I don't think my War on Cash basket will be complete until get some Greed Dot, ticker GDOT, in my portfolio. That's one that I'm really watching this week. They just reported earnings, reported a monster quarter. Earnings were up almost 70%. 14% revenue growth. They raised their full-year guidance. One thing to point out is, this is a company with massive growth potential. A lot of their partnerships that we've talked about are not reflected in their revenue yet because they're brand new. They're growing revenue great on their existing product lines. Their banking-as-a-service is really picking up. The number of active accounts was up 150,000 year over year just on their core business. This is a business that has tremendous growth potential, but is already very profitable. Their guidance calls for earnings per share of about $3.20, which means they're trading at 25X earnings. If you look at the valuations of some of the other War on Cash stocks, that's rather cheap. This business has tremendous potential, already very profitable. I'm excited to see what they do over the next couple of years.
Moser: Good stuff. I'm going a little bit unconventional this week. I'm going with Eventbrite, ticker EB. What does Eventbrite have to do with payments? Austin is looking at me right now through the window shaking his head at me. Listen, Eventbrite is a brand-new company. New IPO, just out on the public markets here recently. Eventbrite itself is event planning, event management for small-scale events to large-scale events and everywhere in between.
The neat thing about Eventbrite is this relationship they have with Square. They have a connection with Square in that Square invested $25 million in Eventbrite back in August of 2017. We go back to Square's earnings really quick, I just want to make the point that while Square did report GAAP profitability, it's worth noting that the source of that GAAP profitability was the mark to their Eventbrite investment. In other words, Eventbrite has panned out very well for them so far. The stake that they held in Eventbrite became a little bit more valuable. They made a note in the call that it had about a $38 million positive impact on the earnings side for the quarter. Without it, Square would have actually been in a loss of about $17 million. That's that's neither here nor there. My point is that Square is going to be running Eventbrite's payments platform here. They signed a contract that goes out through the next five years. A lot of attractive growth prospects with Eventbrite, which means there should be some interesting growth prospects for Square, as well, given their partnership. I'm looking forward to the earnings out later today. We'll learn a little bit more about Eventbrite and what they feel like the future has for them.
Jason Moser owns shares of Eventbrite, Inc. and Square. Matthew Frankel, CFP owns shares of Square. The Motley Fool owns shares of and recommends Square. The Motley Fool has the following options: short January 2019 $80 calls on Square. The Motley Fool has a disclosure policy.