Green Dot Downgraded Despite Earnings Beat, Higher Churn Rate And Weak Macro Environment Keep Analyst Cautious

  • Needham & Company analyst Mayank Tandon downgraded Green Dot Corp GDOT to Hold from Buy
  • The analyst sees a higher customer churn rate, loss of a few key BaaS partners and a weak macroeconomic environment as headwinds, despite better-than-expected Q1 2023 results
  • GDOT's Q1 revenues of $412.4 million beat the consensus of $387.7 million, and adjusted EPS of $0.99 exceeded the analyst expectations of $0.80.
  • Management reiterated the 2023 outlook for adjusted operating revenue at $1.376 billion-$1.462 billion (consensus: $1.41 billion) and adjusted EPS at $1.77 and $1.93 (consensus: $1.83). 
  • The company expects a higher attrition rate in consumer business due to the faster winding down of legacy brands compared to the increase in Go2Bank.
  • Tandon believes guidance reiteration implies weaker expectations for the upcoming quarters, as the adjusted EPS outlook represents a decline of around 30% at the midpoint.
  • The analyst reduced estimates for 2023 revenues and adjusted EPS to $1.410.9 billion (from $1.423.9 billion) and $1.79 (from $1.82), respectively.
  • Price Action: GDOT shares are trading lower by 5.53% at $17.76 on the last check Monday.
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