5 things to know about Marqeta acquiring Power Finance for $275M

The timing of this Fintech deal can seem strange...

Image by Charles Thompson from Pixabay (with added blue filter)

Marqeta, a U.S.-based platform specializing in card issuing which is certified to operate in 40 countries, announced today that it intends to acquire credit card program management startup Power Finance, Inc.

Here are five things to know about the deal:

• The acquisition price is $223 million in cash, with about one-third due over a two-year period subject to certain conditions, plus $52 million in cash subject to a milestone that is projected to be fulfilled within the next 12 months.

• One of the main goals of the deal is for Marqeta customers to have the ability to launch a wider range of credit products.

• Marqeta reported a net loss of $53.2 million in Q3 2022, adjusted profits before interest, taxes, depreciation, and amortization (EBITDA) of $13.6 million, and sales of $191.6 million (compared to $131.5 million during Q3 2021). In the intervening period of time, total processing volume increased by 54% to $42 billion.

• Marqeta’s stock has seen better days. At the time of writing, NASDAQ: MQ has decreased by 35.21% in the last 6 months, 45.38% in the past year and roughly 80% since the company’s IPO in June 2021.

• Marqeta, which once boasted a $18 billion valuation, is now facing a tough fintech winter and soon potentially a global recession (think consumer credit crunch). The Power Finance deal (its first acquisition) seems rather risky given the above info.

Correction: A previous version of this newsletter mentioned a Marqeta stock price decrease “in the past 5 years”. Marqeta’s stock (NASDAQ: MQ) started trading on June 9, 2021. I regret the error.