Marqeta, Inc. (MQ proposed) is generating the most buzz on the IPO Calendar this week, when bankers aim to raise about $3.9 billion. The company, whose technology enables DoorDash, Instacart and Square to issue their own cards and process payments, is among nine names expecting to go public this week. It’s safe to say that Marqeta – ranked No. 7 on the 2021 CNBC Disruptor 50 List – is among the most anticipated IPOs of the year.
“It’s a hot sector – global payments,” a seasoned IPO trader says.
In 2021, Euromonitor projects that global money movement will exceed $74 trillion, according to Marqueta’s prospectus.
Marqeta is going public after riding a surge in pandemic-driven business. In 2020, the Marqeta platform processed $60.1 billion of total processing volume (TPV) – up 177 percent from $21.7 billion in 2019. Visa and Mastercard have certified Marqeta to operate in 36 countries.
Marqeta’s IPO was priced Tuesday night at $27 – $3 above the top of its $20-to-$24 range – on 45.5 million shares. The stock started trading on NASDAQ on Wednesday – opening at $32.50, or 20.4 percent above its IPO price – and closing at $30.52, or 13 percent above its IPO price.
The $27 IPO price gives Marqeta a valuation of about $14.32 billion, based on 530.25 million Class A and Class B shares outstanding after the IPO. That’s in comparison to an estimated market cap of about $4.3 billion in May 2020 after a private funding round. (Reuters is pegging Marqeta’s post-IPO valuation at about $15 billion, including stock options and restricted stock units.)
Goldman Sachs, J.P. Morgan, Citigroup, Barclays, William Blair and KeyBanc Capital Markets are the joint book-runners.
The co-managers are Nomura, HSBC, R. Seelaus & Co. and Siebert Williams Shank.
Marqeta, based in Oakland, California, was founded in 2010. The company says it pioneered modern card issuing. Its cloud-based technology and platform let its clients – DoorDash, Instacart, Uber and Square, to name some of its biggest customers – issue their own prepaid cards or debit cards, and process the payments.
Square accounted for about 70 percent of Marqeta’s net revenue in 2020, a fact highlighted in the “Risk Factors” section of the prospectus. (See page 24.)
For anyone who might be unfamiliar with how Marqeta’s technology makes the digital money machine go ‘round, here is how the company describes its business in the prospectus.
“When you order food using DoorDash or groceries using Instacart, modern card issuing works in the background as money moves from the app to the delivery driver’s payment card, allowing the driver to pay for exactly what you ordered, and nothing else,” Marqeta says in the prospectus.
“When you buy a big screen TV and pay for it in installments using Affirm or Klarna, modern card issuing helps move money to the payment card that Affirm or Klarna uses to seamlessly pay the merchant,” the prospectus says.
“When you receive money from your friend through Square’s Cash App, modern card issuing helps move the funds to your debit card, making it instantly available to you to make purchases,” according to the prospectus.
“Instead of receiving a plastic version in the mail, JPMorgan Chase commercial cardholders will be able to spend immediately in mobile wallets such as Apple Pay or Samsung Pay,” CNBC reported.
Marqeta’s revenue comes from transaction-processing fees and other fees. Its revenue jumped 103 percent in 2020 from 2019.
Worth Noting: Marqeta isn’t profitable. The company reported a net loss of $47.7 million on revenue of $290.3 million in 2020.
For a look at the other eight IPOs on tap this week, please see the IPO Calendar. (You can click the hyperlinks on company names on the IPO Calendar and those links will take you to the IPO profiles on IPOScoop.com.)
(Editor’s Note: This column was updated Wednesday to include Marqeta’s IPO pricing details, valuation and opening trade on the NASDAQ.)
(Never trade on proposed symbols. You might wind up owning something on the OTC Bulletin Board.)
Disclosure: Nobody on the IPOScoop.com staff has a position in any stocks mentioned above, nor do they trade or invest in IPOs. The IPOScoop.com staff does not issue advice, recommendations or opinions.
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