gRowth stocks are a great way to build life-changing wealth from the stock market. While many high growth stocks can cost hundreds of dollars (or more), sometimes you will find great companies whose stocks are trading for less than $ 20 a share.
A growth stock with high potential is Marqueta (NASDAQ: MQ), which is currently trading around $ 19.50 per share. Marqeta seeks to bring card payments into the digital age and pursues a huge market – the $ 30 trillion card issuance space.
Image source: Getty Images.
Card issuance for the modern era
Marqeta describes itself as the ‘modern card issuing platform’. FinTech creates customizable spending cards for various businesses, including Square, DoorDash, Alphabetis Google, and Goldman Sachs.
The company competes with established competitors like Global payments and Fiserv. However, the advantage of Marqeta is its speed and flexibility of payment. The company prides itself on creating expense cards in a fraction of the time of traditional card issuers. Businesses also appreciate the personalization of Marqeta cards, which can help them meet their specific business needs.
Here are three examples where Marqeta innovates.
1. DoorDash uses Marqeta to reduce fraud
DoorDash is a company that finds Marqeta’s flexible solutions attractive. DoorDash essentially acts as an intermediary between its customers and the restaurants. When you place an order on the app, a Dasher comes to the restaurant and has to pay for the order multiple times through the restaurant’s POS system. However, giving a Dasher a card with a fixed spending limit – say $ 500 or $ 1,000 – can open the door to potential fraud.
Marqeta corrects this. By providing a feature called dynamic spend control, the Marqeta-activated card issued to Dashers makes just enough money available to spend on a specific order at the specific restaurant the customer has ordered from. Dynamic expense control is just one of the solutions that Marqeta has created, allowing mobile ordering applications to operate seamlessly in the digital age.
2. Marqeta has spending cards using cryptocurrencies
Another area that Marqeta has recently engaged in is issuing crypto spending cards with companies like Global Coinbase and Shakepay. This card allows customers to spend from encrypted accounts just like a regular debit or credit card. It also allows them to earn rewards and automatically adjusts a customer’s credit limit based on the user’s crypto balances.
A key feature that cryptocurrency companies value in Marqeta’s cards is its just-in-time funding feature. This allows these cryptocurrency companies to create authorized card products in real time based on a user’s available cryptocurrency balance. Better yet, because it is done with Visa in partnership, these cards are accepted wherever Visa is taken.
“It is one of the forefront of innovation in fintech and these new cards offer even more access points and utility for cryptocurrencies”, explained Randy Kern, chief technology officer. , when discussing crypto-fueled cards. “We’re excited to see that our platform can help these businesses build full-service digital banking capabilities alongside the card itself. ”
3. Buy Now, Pay Later Businesses Use Marqeta to Grow Their Merchant Base
Marqeta also works with buy now, pay later (BNPL) companies like After payment and To affirm. Marqeta creates virtual cards that connect to users’ BNPL accounts, which can be used like a regular credit or debit card.
Marqeta’s card offering helps BNPL companies offer their services to more merchants. This is because BNPL companies currently need to integrate a merchant to make their payment plans available. However, with Marqeta’s virtual cards, retailers can easily take Marqeta’s cards the same way they accept Visa or MasterCard. This streamlines the payment process for consumers while giving BNPL businesses easier access to more merchants.
Image source: Getty Images.
Strong demand drives growth for this key metric
Marqeta processes more transactions year after year. In the third quarter, the total volume processed, or the total amount of payments processed through its platform, net of returns, increased 60% from a year ago, to $ 28 billion. Its total volume processed is $ 78 billion for the first nine months, up 89% from last year.
However, the losses also increase. Over three months, the losses amount to $ 81 million. Last year he lost $ 22 million. Losses increased due to higher compensation costs. Specifically, stock-based compensation stands at $ 106 million this year, up from $ 19 million last year.
This compensation is higher for several reasons. For one thing, the company went public earlier this year. As a result, it recognized stock-based compensation for shares awarded to employees prior to its IPO, resulting in higher stock-based compensation expense than last year. Additionally, the company spends more on technology and people as it expands its reach, which is to be expected as the business grows.
Analysts forecast double-digit percentage growth next year
In 2022, analysts expect Marqeta to see its revenues increase by 33% compared to expected revenues for the year 2021 and by 127% compared to 2020. Analysts also see Marqeta improving its results, with earnings per share amounting to a loss of $ 0.27 per share, improving expected EPS for 2021 by a loss of $ 0.37 per share.
Marqeta is innovating in the spending card space and many companies have already turned to it to create their own cards. What I like is the breadth of its reach, with clients including established companies like Goldman Sachs and young tech disruptors like Square and Affirm. Marqeta can be seen as the plumbing fixture of the digital age of finance, helping to connect more apps than ever before. The company is at the start of its growth story, and best of all, you can grab the stock for under $ 20 a share.
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Suzanne Frey, an executive at Alphabet, is a member of the board of directors of The Motley Fool. Courtney Carlsen owns shares of Alphabet (C shares) and Marqeta, Inc. The Motley Fool owns and recommends AFTERPAY T FPO, Alphabet (A shares), Alphabet (C shares), Mastercard, Square and Visa. The Motley Fool has a disclosure policy.
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