Tuesday, January 4, 2011
Financial outlooks differ for Green Dot, NetSpend
Following the initial public offerings of Green Dot Corp. and NetSpend Holdings Inc. in 2010, new year Wall Street reports suggest Green Dot is the better bet for investors. Analysts have calculated that Green Dot shares could reach as high as $65 per share, while those for NetSpend will hover between the $13 to $15 range.
According to investor website Benzinga.com, investment banker Piper Jaffray issued a note to its clients that said Green Dot's reloadable, network-branded prepaid cards are growing in popularity with consumers; additionally, the low fees Green Dot charges on the cards reduces competitive and regulatory risks to the company's future earning potential.
But apparently the same can not be said for NetSpend. An Everything Gold blog post said NetSpend's revenue model is under pressure from the new regulatory environment. The blog published an analysis from equities research firm Wedbush that advised investors to view NetSpend as a potentially solid investment, but that regulation, including the recently introduced Prepaid Card Consumer Protection Act, raises concerns about the "validity of NetSpend's revenue model."
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