Green Dot is getting slammed today, down nearly 20% at one point, when American Express and Wal-mart announced they’re joining forces to offer their own version of pre-paid credit cards. However, today’s not just a one off surprise slam of Green Dot’s stock. If you look at the chart of Green Dot for the past few years, it’s been nothing but negative and in a terrible downward slope – to the point where you start to wonder if it’s ever going to go up again.
But if you can get over the awful looking chart for Green Dot, and believe in the company, then this might be a chance to get in on the bottom of the stock. At least that’s what Bryan Murphy is saying over at SmallCapNetwork.com
Point being, while the service is being touted as an alternative to debit and checking accounts, like Green Dot, it still doesn’t fully play the role a true checking account can, and it’s certainly not a Green Dot-killer. It just makes Wal-Mart the de facto bank for cash deposits. Third-party ATM fees still apply, though MoneyPass ATMs that will be fee-free for the AmEx cards’ holders….just as they are for Green Dot car holders.
The bottom line is, on the surface it’s scary news for Green Dot Corporation, which drives (or did) more than 60% of its revenue through Wal-Mart stores. But, this doesn’t really change anything unless a consumer just has a need/preference for an American Express account over a Visa or MasterCard account – an unlikely scenario for someone who doesn’t even have a bank account. It would be rare for a user to be able to fully live their financial life with the card alone, just because the card doesn’t do everything someone needs to do unless they have a smartphone… which is another leap of faith. How many folks without checking accounts are paying for smartphones and related data fees? Some are, but most aren’t.
This may be an opportunity to get into some GDOT while the market’s flinching.
And you’d think that pre-paid cards would serve a large group of people considering we are still recovering from the “Great Recession”.