This story has been updated.
Green Dot Corp.’s shares were down nearly 13% this morning after an analyst downgraded the prepaid card company’s shares because it reported a lower rate of card activations.
The company on Feb. 10 said consumers activated 1.5 million of its prepaid debit cards during the fourth quarter, up 10% from a year earlier. The increase was smaller than the 37% year-over-year growth rate Green Dot reported for the previous quarter (
The company’s quarterly results were good, but they “were not without some blemishes that could put pressure on the shares, including deceleration in card activations,” Thomas McCrohan, an analyst with Janney Capital Markets, wrote in a research note to investors Friday morning. McCrohan downgraded Green Dot’s shares to “sell” from “neutral.”
Green Dot’s share price was down 12.7% to $50.91 Friday morning. By midday, the stock was improving at $54.46. The company's stock closed at $58.31 on Thursday.
Green Dot operates prepaid card programs targeted primarily at underbanked consumers. The company, which markets cards issued by partner banks and sold through such retail stores as Wal-Mart Stores Inc., Walgreen Co. and 7-Eleven Inc., has been pushing to grow its base of long-term customers (
Steve Streit, the Monrovia, Calif.-based company’s chairman, president and chief executive, said during an earnings conference call yesterday that about half of its cards are sold to long-term users, which provide about 85% of its revenue. Many of those customers use direct deposit and make more-frequent transactions than short-term users.
Green Dot got a boost last month when the U.S. Treasury Department selected it to manage a pilot program that will allow low-income Americans to receive their tax refunds on a prepaid card (
The company said its fourth-quarter revenue surged 32% from a year earlier to $91.8 million. The company report net income of $7.94 million, up 16% from a year earlier (
