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Friday - Craig-Hallum analysts have upgraded Green Dot Corporation (NYSE:GDOT) stock from Hold to Buy, setting a new price target at $14.00. The upgrade follows Green Dot’s decision to seek advisory services for a potential sale, alongside the recent departure of CEO George Gresham and the appointment of Chris Ruppel as Interim President. The stock, currently trading at $8.11, has experienced significant pressure, down 42% over the past six months according to InvestingPro data.
Analysts at Craig-Hallum highlight the company’s diverse assets, including its Banking-as-a-Service (BaaS) platform, which has recently added notable partners, and its Money Movement services, which encompass the Green Dot Network and Tax operations. With annual revenue of $1.72 billion and a market capitalization of just $434 million, the firm acknowledges the challenges Green Dot faced with finding a catalyst for growth but now sees the engagement of advisors to shop the business as a clear positive move. InvestingPro analysis indicates the stock is currently trading below its Fair Value, suggesting potential upside opportunity.
The BaaS platform, powering major brands such as Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN), alongside the company’s Earned Wage Access (EWA) Paycard business, is seen as particularly valuable. The Tax segment, acquired in 2014 and now 25% larger with an updated platform, is also considered a hidden asset that could fetch a price exceeding Green Dot’s entire market cap. Trading at just 0.41 times book value, the stock appears notably undervalued based on traditional metrics.
The company’s Green Dot Network is described as a high-margin, low capital intensity business with a strong competitive moat, servicing the burgeoning digital bank market with 90,000 locations for in-person transactions. The analysts commend the board’s decision to explore strategic options, suggesting that the stock’s current valuation represents significant value and could lead to substantial upside as the sale process progresses. For deeper insights into Green Dot’s valuation and potential, including 12 additional exclusive ProTips and comprehensive financial analysis, visit InvestingPro.
In other recent news, Green Dot Corporation reported its fourth-quarter 2024 earnings, revealing a non-GAAP earnings per share (EPS) of $0.40, which fell short of the $0.45 forecast. However, the company achieved a revenue of $455.02 million, surpassing expectations of $422.54 million, marking a significant year-over-year growth of 25%. Despite the revenue increase, the earnings miss contributed to a downward adjustment in the stock’s price target by Keefe, Bruyette & Woods (KBW), which lowered it from $12.00 to $10.00 while maintaining a Market Perform rating.
In related developments, Green Dot is exploring strategic alternatives and has appointed William I Jacobs as interim CEO, following George Gresham’s departure from his roles. The company also announced the appointment of Kim Olson as Chief Risk Officer, who will oversee the risk management strategy, reporting directly to the CEO. Olson’s extensive experience in financial services is expected to bolster Green Dot’s compliance and risk management practices.
These changes come amid Green Dot’s ongoing efforts to navigate a complex regulatory environment and competitive market. The company’s strategic initiatives include the launch of new products and partnerships, such as the ARC platform, aimed at enhancing its market position. As Green Dot continues to invest in compliance and platform consolidation, it projects a revenue growth of 10% for 2025, despite anticipating a 9% decline in adjusted EBITDA.
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