Insights

Why Marqetaʻs Stock Price Sank Then Recovered Thursday

What Happened

It was a wild day for Marqeta Inc. (NASDAQ: MQ) as its stock price sank like a stone after the opening bell on Thursday, dropping some 34% at 9:37 a.m. ET. At 9:41 a.m., trading momentarily halted for a limit-up, limit-down (LULD) pause due to excess volatility.

The stock began trading again at around 9:46 a.m. ET, according to The Fly, and rebounded quickly thereafter. It was down only 2.2% to $10.96 per share at the closing bell.

What caused the volatility for Marqeta?

So what

The sharp morning decline may have been related to the news delivered by Fidelity National Information Services (NYSE: FIS) that its payment network was selected by Block (NYSE: SQ) to power its Cash App Card, as Fidelity National President Stephanie Ferris said on the second-quarter earnings call Thursday morning.

The market reacted swiftly under the assumption that this win by Fidelity National would infringe upon Marqetaʻs relationship with Block. Marqeta provides the payment infrastructure for Blockʻs virtual debit card.

But then, KeyBanc analyst Josh Beck released a note later in the morning saying he does not see this Fidelity win infringing upon Marqetaʻs relationship with Block. A Truist (NYSE: TFC) analyst made a similar call, and Marqetaʻs stock quickly recovered.

Now what

Earlier this week, KeyBancʻs Beck raised the price target for Marqeta to $11, which is pretty much where it is now.

Marqeta reports Q2 earnings next Wednesday, Aug. 10, so there may be more news on the impact, if any, on the Block-Fidelity deal.

Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Block, Inc. The Motley Fool recommends Marqeta, Inc. The Motley Fool has a disclosure policy.

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