Marqeta shares pop after IPO: time to buy?

Hot fintech firm Marqeta Inc. (NASDAQ:MQ) shares on Wednesday popped shortly after going public to a high of $32.75. The stock pulled back to close at $30.52 after bottoming at $29.00. Marqeta closed the session with a market capitalisation of more than $16 billion, up 13% from its IPO valuation of $15 billion ($27.00 per share).

Marqeta’s IPO is among other fintech firms planned to go public in the coming months. Online lender SoFi will go public soon, and Robinhood Markets is targeting its IPO in July.

What is Marqeta?

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Marqeta is a fintech company that offers its customers a platform to create branded debit cards and prepaid cards. Some of Marqeta’s popular clients include delivery group DoorDash Inc. (NYSE:DASH), Square Inc. (NYSE:SQ), and Swedish fintech Klarna.

In the IPO prospectus, Marqeta said annualized revenue grew 123% to $108 million. The company’s fiscal year 2020 revenue more than doubled to $290.3 (£205.46) million. Marqeta said it had issued more than 320 million cards to customers to date. CEO Jason Gardner told that,

Today in the United States there’s nearly $6.7 trillion of card volume, and we are simply scratching the surface with $60 billion in volume.

MQ shares currently trade at a price-sales (P/S) ratio of about 55.19 based on last year’s revenue of $290 million. Investors appear to be betting on its growth potential rather than performance during the previous 12 months.

Technical overview

Technically, MQ shares appear to have pulled back from Wednesday’s high of $32.75. The stock price has since returned to the center of the 100-min RSI after surging to overbought levels. 

Marqeta investors can target short-term profits at $31.71 and $32.46. On the other hand, skeptics can short MQ shares by targeting profits at $29.91 and $29.00.

Bottom line: MQ stock rebound seems more likely 

Marqeta pulled back to close at $30.52. But it opened higher on Tuesday, fronting a potential rebound. MQ shares traded at $30.95 Thursday morning, up 1.41% from Wednesday’s close. The company operates in an industry with potential, so there is more upside from MQ stock.