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Wedbush analyst Moshe Katri has started coverage of Marqeta (NASDAQ:MQ) with a Neutral rating Thursday given the card issuing platform's outsized Block (SQ) concentration as well as its volume exposure to the troubled Buy Now, Pay Later space.
Katri raised his concerns about Block (SQ), formerly known as Square, accounting for 69% of Marqeta's (MQ) second-quarter net revenues, as it manages certain card issuing programs for SQ, making it MQ's largest client.
Block (SQ), which has seen its shares fall 64% year-to-date, showed troubling signs after its Q2 earnings, as its Square ecosystem gross payment volume growth was expected to moderate.
Elsewhere, "we’re also concerned over the company’s volume exposure to the BNPL sector, especially if/as vendors tighten underwriting/credit standards under a scenario of an economic slowdown, impacting volume growth," Katri wrote in a note to clients.
Marqeta (MQ), of note, hasn't been profitable since it went public in June 2021, the analyst said.
Katri's Neutral rating agrees with the Quant's rating of Hold, but diverges from the average Wall Street rating of Buy.
Take a look at why SA contributor Michael Wiggins De Oliveira views Marqeta shares as a Sell.