Green Dot (NYSE:GDOT), the fintech company known for its prepaid debit cards and nontraditional checking accounts, reported its fourth-quarter and 2018 year-end earnings on Wednesday afternoon.
It's fair to say that the market isn't thrilled with the results. As of noon EST on Thursday, Green Dot was down by more than 9%.
At first glance, Green Dot's results look strong. Earnings of $0.56 per share handily beat the $0.49 figure analysts had been looking for, and revenue of $237.83 million came in just ahead of expectations as well. So if Green Dot beat expectations on both the top and bottom lines, why is the stock plunging?
There's not a lot to dislike in Green Dot's fourth-quarter numbers. One potentially disappointing area is Green Dot's just-announced 2019 guidance. The company is expecting 6% year-over-year revenue growth in the first quarter, for example, as compared with the 12% growth Green Dot produced in the fourth quarter. The same can be said for the company's expected 10% year-over-year EPS growth.
Another potential reason for today's drop is a big analyst downgrade. JPMorgan Chase cut its price target on Green Dot from $97 to $83 this morning in the wake of the earnings announcement.
Green Dot is a business with a lot of long-term potential in the fintech space, but it's possible that analysts and investors simply don't think the 10% EPS growth expected in 2019 is worth paying more than 20 times forward earnings for. From a long-term perspective, however, Green Dot has several interesting possible catalysts to increase revenue and could be worth a look at the new lower share price.