Marqeta (MQ -1.99%) took a hit on Tuesday as the stock price sank 4.1% on a day that all of the major indexes were down big. The Dow Jones Industrial Average was down roughly 1,296 points at the closing bell, a 3.9% drop, while the S&P 500 was down 4.3% and the Nasdaq dropped 5.2% for the day.
Marqeta actually got some good news on Monday, but it was not enough to offset the market sell-off on Tuesday.
The August consumer price index (CPI) report was not what investors had hoped for. There was much anticipation after a series of sharp interest rate increases by the Federal Reserve over the past few months that inflation would start moving downward, but the August CPI showed that inflation ticked up 0.1% from July. While gas prices were down 10.6% in the month, food, shelter, and medical costs were all up, driving inflation slightly higher. Also, the core CPI, which excludes food and energy costs, was up 0.6% in August over July.
Year over year, inflation was up 8.3% in August, which was lower than the July year-over-year increase, but higher than the 8.1% that was expected.
This is not good news for Marqeta, which runs a payment processing network that credit card providers use to facilitate transactions. So, with the Fed intent on raising rates to slow down inflation, and potentially the economy, it is not great news for Marqeta, which relies on higher consumer and business spending. Many tech stocks, including those in the payment industry, were down on Tuesday, so high inflation remains a concern for fintechs across the space.
The bad news on inflation overshadowed some good news that Marqeta reported Monday, as it announced a partnership with buy now, pay later company Bread Financial. Bread selected Marqeta as the network for its Bread Pay One-Time Use Card, which can be used in-person or online for installment payments.
But in the near term the fintech's growth will be muted as the economy enters into a potential recession or period of slow growth.