Marqeta: Cutting Our Fair Value Estimate to $6 From $7 Following Weak Earnings and Guidance Cut

Returning to no-moat-rated Marqeta after earnings, we are reducing our fair value to $6 from $7. The decrease comes from lower near- to medium-term revenue projections in alignment with the firm's lower guidance for the fourth quarter of 2024. The company's explanation for the weak guidance is that a stricter regulatory environment has increased the time to launch new programs, slowing down processing volume and revenue growth from new clients. Hypothetically, this is primarily an issue of timing, as slower program ramps mean lower growth in the second half of 2024 and 2025 but a recovery in 2026. However, the suddenness of the guidance change—as well as the firm's comments on some clients bringing elements of their card program management in-house—leads us to take a more cautious stance on our future projections, hence the decrease in our fair value estimate. Despite the decrease, we see Marqeta as undervalued following a severely negative reaction from the market to the firm's earnings and new guidance.