Green Dot is targeting the ‘unhappily banked’ for its prepaid cards
Steven W. Streit says he doesn’t have anything against traditional banks. He’s just happy to take away their customers.
Streit, a former radio disc jockey, is chief executive of Green Dot Corp., best known for its prepaid reloadable debit cards. Green Dot also provides banking services with its GoBank mobile bank account.
Products include Green Dot MasterCard and Visa prepaid debit cards as well as co-branded prepaid card programs. It also offers Visa-branded gift cards.
The Pasadena company’s Green Dot Network lets consumers use cash to reload the prepaid debit cards or to transfer cash to any of the network’s members, which include competing prepaid card programs and other online accounts.
“Our mission as a company is to reinvent personal banking for the masses, and we define the masses as American families earning less than $75,000 a year,” Streit told an investor forum this month.
Streit said Green Dot targets people who are “unhappily banked, meaning you have a checking account somewhere and you just don’t like it.”
Streit founded the company under the name Next Estate Communications, in 1999.
Its first debit card was the I-GEN, the following year. In 2001 came the I-GEN MasterCard.
Rite Aid and CVS Pharmacy stores sold the first Green Dot debit cards in 2002. By 2003, I-GEN cards were sold in more than 18,000 stores nationwide.
In 2004, the company changed its name to Green Dot Corp. The company went public in 2010.
Wal-Mart stores are a key outlet for Green Dot, but not as important as they once were.
In 2010, Streit said, Wal-Mart “had to be 60% of our revenue.” Now, Streit said, Green Dot is more diversified, “with no one program representing greater than 15% of earnings or 30% of revenue.”
In January, Green Dot said it had been chosen as a 2015 Paybefore Awards winner in six categories, including change agent of the year and consumer champion, for its prepaid debit card products, mobile bank account and gift cards.
Also in January, Green Dot announced that revenue had risen to $150.6 million in the last three months of 2015 from $142.3 million a year earlier. But the company swung to a net loss of $844,000 for the quarter, primarily because of higher interest expenses and taxes, compared with a net profit of $1 million a year earlier.
From its beginnings in 1999, Green Dot has grown immensely.
“We’re in about 100,000 retailers. We’re in check cashing stores, we’re in tax preparation offices, and we’re in the app stores and online,” Streit said.
Green Dot has also managed to “generate a lot of cash,” Streit said, with “about $130 million or so expected to be generated in this year, 2015.”
Economic downturns can affect its business, with consumers less likely to use Green Dot’s services if they curtail their spending.
Streit said the bigger challenge is making the right prediction about the future.
“It’s hard to know what the head wind is with precision because it depends on what you believe for behavior of cashiers at a retail store, what you believe of consumers and how they adopt new methods of doing what they’ve done,” he said.
Of the 15 analysts who regularly cover Green Dot, three rate it a strong buy, two rate it as a buy and 12 suggest holding the stock.
Piper Jaffray analysts Michael J. Grondahl and Dain A. Haukos, who are upbeat about the stock’s potential, noted that although measurements of the company remain positive, growth has slowed.