I was shocked when Green Dot revised its end of year expectations Thursday night.
Green Dot Sharply Lowers Profit Forecast, Citing Threat to Model
Over the past few months, as Green Dot’s chief executive Steve Streit met with all of his company’s major retailer partners, one thing became certain: Most of those stores could start putting competing products on their shelves.
So, in an effort to be up front, the Monrovia, Calif., prepaid card company announced late Thursday that it was lowering its yearend revenue forecast by about 9%, to a range of $534 million to $543 million, and reducing its earnings-per-share projections from a range of $1.65 to $1.70 to a range of $1.29 to $1.32.
“The industry is evolving. We have effectively been alone in terms of retail, and now that we believe that won’t be the case we wanted to … reforecast,” Streit told American Banker in an interview Friday. “We would rather have an investor sell a share because of what they know rather than not sell a share based on what they do not know. We always want to be up front.”
Like most analysts, Gil Luria of Wedbush downgraded his rating of the company to Neutral from Outperform.
In a note to investors, he says:
We believe retailers’ change of heart on introducing multiple brands of GPR cards creates substantial uncertainty going forward.
The stock took an equal dive losing more than 60 percent of its value before the start of the weekend.
Still, even though Green Dot has bled more than $1.6 billion in market cap since it IPO’d two years ago, I think the company has a future.
The only question is how profitable the business will be…