NetSpend Holdings Inc.’s initial day as a public company fared well, but it might have done better had it debuted on the market a week earlier, according to one analyst.
Some uncertainty surrounding prepaid card issuer Metabank, a subsidiary of Meta Financial Group Inc., postponed NetSpend’s initial public offering by a week. Last week, the Office of Thrift Supervision ordered MetaBank to dump its iAdvance program after determining the bank misrepresented the credit product.
MetaBank is the biggest issuer of NetSpend’s reloadable prepaid cards and accounted for 71% of its active cards as of June 30.
NetSpend’s stock price rose 18% Oct. 19, closing at $13, up $2 from its initial $11 price. Shares peaked at $13.47. The stock could have performed better had the IPO not been delayed, says Gil Luria, an analyst with Wedbush Securities in Los Angeles.
“[Netspend] probably would have started at $13 and ended at $15” had it debuted a week earlier, Luria says.
The Austin, Texas-based prepaid card marketer is selling its shares on the Nasdaq exchange under the ticker symbol “NTSP.” NetSpend in July said it planned to raise $200 million through the IPO (see
How NetSpend’s stock performs will depend on various factors, Luria says. Netspend’s MetaBank relationship clearly has an effect on how investors view the company, he adds.
“The dependence on MetaBank has kind of come back to haunt them,” Luria says.
In a Securities and Exchange Commission filing Oct. 18, NetSpend said it planned to transition at least 15% of its noncorporate employer-issued prepaid card volume to one or more additional issuing banks within 90 days (
NetSpend has signed letters of intent to add as card issuers Bancorp Bank, a subsidiary of Wilmington, Del.-based bank holding company Bancorp Inc., and H&R Block Bank, a subsidiary of the Kansas City, Mo.-based tax-preparation company H&R Block Inc. That should help NetSpend in the long-term, Luria says.
“Adding more issuers and shifting some of [its] cards to new issuers is something that should help alleviate [investors’] concerns,” he adds.
