MQ

Publicly traded companies mentioned herein: Adyen NV (ADYEN NA), Afterpay Ltd (APT AU), Affirm Holdings Inc (AFRM), Coinbase Global Inc (COIN), DoorDash Inc (DASH), Fiserv Inc (FISV), Global Payments Inc (GPN), Goldman Sachs Group Inc/The (GS), JPMorgan Chase & Co (JPM), Marqeta Inc (MQ), Square Inc (SQ), Uber Technologies Inc (UBER)

Highlights

The presenter is long shares of Marqeta (MQ), a recent IPO that is trading at $19 per share, well below its $27 IPO price. He sees it as a dynamic company that is misunderstood by investors due to a concentrated customer exposure that many deem risky. Marqeta is a modern card issuing business which operates similarly to how Adyen and Stripe go about acquiring merchants. It has a modern cloud-built tech stack that is essentially best-in-class for the payments industry and its products and services are receiving solid reviews. Currently about 90% of the payments market is run by three traditional payments players (FIS, FISV, and GPN) who run on antiquated mainframes that can’t keep up with current demand. Marqeta rose to prominence by becoming the service partner for Square’s cash card and debit products, and in the most recent quarter Square made up 68% of Marqeta’s revenue. The company’s platform operates at 99.995% uptime on Square's cash card and debit products and has been able to handle Square’s impressive growth the past few years, which is a great selling point as the company tries to gain market share. Marqeta just reported Q3 earnings, beating the Street’s revenue projection by 10% with strong gross profit and margins. Management also guided Q4 revenues 11% ahead of Street estimates. Going forward, there are two legs to the presenter’s bull case: Marqeta’s prospect to scale existing customers outside of Square and its ability to displace legacy card issuers. Based on these dynamics, he sees a path to $37 per share with the potential for a multi-bagger over time.