Wall Street is sleeping on this potential Fintech giant
The financial sector is one of the cornerstones of society. According to general industrial estimates, finance accounts for as much as a quarter of the world economy.
Modern card issuer Marqeta (MQ 3.95%) is just a small spot in the financial universe, but it may not always be so – the company’s innovative and flexible technology makes it a potential titan in creation. This is why it may be one of the outstanding stock ideas of this bear market.
An enormous opportunity for the decades to come
Not only is banking and finance one of the world’s largest industries, but they are also one of the oldest, dating back centuries. The financial sector was built without technology, long before computers came along.
But technology has a way of seeping into old, stagnant industries, and financial technology, or fintech, is one of the hottest sectors on Wall Street. Fintech brings new ways for consumers to pay, transfer, borrow and manage money.
Allied Market Research estimates that the global fintech market is worth about $ 110 billion, but could grow by an average of 20% annually to $ 698 billion by 2030.
Think about how big the global financial sector is. Estimates value the global financial industry at 22.5 trillion dollars, with expectations of high single-digit growth in the coming years. This is a big picture trend that is likely to play out for decades.
How Marqeta can help you
It can be difficult to decide how best to invest in a huge opportunity, but this is where Marqeta can benefit investors. A modern card issuer offers software tools to help fintech companies connect to the existing financial system.
Traditional payments act as a cash advance: You swipe a credit card, which will approve you for the transaction amount, and your bank statement will only tell you that you spent $ X at the Y-dealer. But Marqeta allows companies to build custom payment technologies that can be much more flexible.
For example, the grocery delivery company uses Instacart Marqeta to control when, where and how much customers are allowed to spend to ensure that they only buy what they need for customer orders. This type of check would not be possible with a traditional payment card.
These sophisticated technologies are constantly infiltrating everyday life, from buying groceries through Instacart, ordering food through DoorDash“Buy now, pay later” with Confirmand peer-to-peer payments with Block.
Fortunately, you do not have to try to pick and choose which companies will be the technology titans of the future, because Marqeta runs many of these companies.
Shareholders can ride on the growth of Marqeta’s customers because the company takes a percentage of each transaction it conducts, which means it wins when customers do. The company’s revenue grew 54% year over year in 2022 Q1, totaling $ 575 million over the last four quarters; Marqeta’s history is far from over.
Did I mention that the Marqeta share is a bargain?
Nevertheless, Marqeta will have to prove itself over time, even if the business model seems convincing. But getting a deal on stocks can help sweeten the pot.
Marqeta was listed last summer, a few months before the market peaked and began to fall. Marqeta has fallen about 75% from the highest, and fell to a price-to-sale ratio (P / S) of just over 8.
MQ data by YCharts
To underline how cheap Marqeta has become, the company holds $ 1.6 billion in cash while the stock’s market value is $ 4.5 billion. This means that as much as 35% of Marqeta’s value is now cash. By comparison, only 2.5% of TeslaThe market value is cash today.
Marqeta is not profitable yet, and free cash flow is negative. But with only $ 10 million in cash burned in the past year, Marqeta is doing well with the $ 1.6 billion it has for immediate needs. Marqeta may be ready to deliver strong long-term return on investment if customers continue to thrive.
