What happened
It was a rocky month for Marqeta Inc. (MQ 0.79%) as the fintech saw its stock price plummet 18.8% in August, according to S&P Global Market Intelligence.
The payment-processing company trailed all of the major indexes as the S&P 500 was down 4.2%, the Dow Jones Industrial Average fell 4.1%, and the Nasdaq Composite dropped 4.6% in August. The stock price is down a whopping 57% year to date as of Sept. 6, trading at just over $7 per share.
So what
Marqeta had a volatile month as the stock price suffered several jolts. On Aug. 4, it was down as much as 34% during trading on the news that Block (SQ 2.90%) had selected Marqeta's rival, Fidelity National Information Services (FIS 1.30%) as the payment network to power its Cash App Card. But the stock bounced back that same day after several analysts came out and said the relationship with Fidelity National would not infringe upon Marqeta's relationship with Block as the network for its virtual debit card.
NASDAQ: MQ
Key Data Points
Then on Aug. 10, Marqeta released its second-quarter earnings report, which beat earnings and revenue estimates. Revenue was up 53% year over year to $187 million, while gross profit was $78 million, up 66% over Q2 2021. The company had a net loss of $45 million, or $0.08 per share, which was 72% better than a year ago and beat the $0.10 earnings per share (EPS) net loss anticipated by analysts. Total processing volume (TPV) was $40 billion for the quarter, up 53% year over year.
Certainly, these were solid numbers, but the stock dropped sharply the next day on news that founder and CEO Jason Gardner was leaving his post to become executive chair of the board. Furthermore, Chief Operating Officer Vidya Peters resigned from her post effective Sept. 3. This news rattled the market and sent the stock tumbling some 26% from over $11 per share.
Now what
On the Q2 earnings call, Gardner said that while he "succeeded in leading Marqeta to its present state as the founder and CEO," the next stage of growth requires new leadership:
When we went public in 2021, I promised to hand leadership to the best person at the appropriate time. After thoughtful consideration of what the next phase of growth will require, I've concluded that now is the time to begin the search for this person. We will search for a CEO with deep experience scaling an innovative, high-growth business. I have led Marqeta from zero to one, and soon it will be time to pass the baton to the best person to lead it from one to infinity.
In the third quarter, Marqeta expects year-over-year revenue growth of 36% to 38%, which is slower growth than Q3 2021. However, while the continued growth is promising, there is much uncertainty ahead with the impending leadership turnover and succession planning, combined with a slowing economy. As a result, things could remain volatile in the near term.
