Green Dot Corp. announced late Wednesday that company founder and chief executive Steven W. Streit is retiring. The prepaid card and banking services provider appointed William I. Jacobs, chairman of its board of directors, as interim CEO while it seeks a permanent successor.
Streit will continue with the company for two years as independent advisor with the title of “chief innovation officer.” Streit said he had pegged his planned retirement around the company’s two-decade mark. But his announcement comes at a time when Pasadena, Calif.-based Green Dot’s stock price is down by more than two-thirds since January.
“October marked Green Dot’s 20th anniversary and the benchmark for when I promised myself and my family that I would retire from my role as Green Dot’s CEO,” Streit said in a company news release. “While I didn’t provide the board with any specific timeframe or date for my desired transition, earlier this year as part of our routine succession planning, the board established a search committee and retained a recruiter to identify strong candidates. It is my belief that the recruiter now has the opportunity to be even more productive with my retirement public.”
The company also announced that chief financial officer Mark Shifke will retire. No explanation was given. Jess Unruh, currently operational CFO and chief accounting officer, will serve as interim CFO. Meanwhile, J. Christopher Brewster, chairperson of the board’s Audit Committee, will serve as interim president. All the changes will become effective Dec. 31, the company said.
“Steve revolutionized banking services 20 years ago with his insight into innovation, consumer behaviors and market changes,” Jacobs said in a statement. “The foundation laid by Steve leaves Green Dot well positioned to continue to lead and transform the financial services industry in the future. I want to thank both Steve and Mark for their many years of service to the company.”
From a 2019 high of $83.09 per share in mid-January, Green Dot shares closed Wednesday at $25.86, a drop of 69%. The stock took several big dips this year, including a 42% plunge in August after Green Dot’s second-quarter results disappointed Wall Street. Despite the investor dissatisfaction with the status quo, the uncertainty created by the upcoming management changes prompted at least one analyst to issue a “sell” recommendation on Green Dot’s stock, which was down another 13% in late-morning trading Thursday.
Some of this year’s investor trepidation is the result of rising competition for business from consumers mostly outside the financial mainstream. Green Dot addressed this market through not only prepaid cards, but also with its banking-as-a-service platform that leverages its Green Dot Bank subsidiary.
“We believe the management changes reduce visibility, but Green Dot’s enterprise value totals about $1.1 billion, which is below recent funding rounds at select young challenger banks,” stock analyst Robert Napoli of Chicago-based William Blair & Co. notes in a Thursday report. “Chime Bank (run by Chris Britt, a former Green Dot employee) recently raised $500 million at a $5.8 billion valuation (up from $1.5 billion valuation in March 2019) at a reported 20-times revenue. Green Dot is currently valued at one-times revenue.”
Napoli wrote that while “overall recent results have been disappointing” and a shakeout in Green Dot’s niche may be coming, the company still could thrive. “Green Dot has evolved the business from a prepaid company to a fintech/payments/banking company, which should expand the market opportunity,” his report says. “Consider, Green Dot products/services touched 30 million people in 2016, 35 million in 2017, and 50 million in 2018. We believe Green Dot’s banking-as-a-service … model, improving customer mix, and expanded market opportunity has the potential to support healthy long-term growth.”
Prepaid market researcher Sue Brown of Marlborough, Mass.-based Mercator Advisory Group Inc. calls Streit “an industry pioneer” and says one of his major achievements is “Reload@TheRegister,” Green Dot’s reload network.
“This network created a viable way for many prepaid cardholders to be able to load cash on to their general-purpose reloadable (GPR) prepaid debit cards, which provided a way for consumers to turn cash into an electronic form of payment,” Brown tells Digital Transactions News by email. “This functionality helped lift many unbanked and underbanked consumers in to financial inclusion in the United States by making the cards a true substitute for a checking account. With Striet leaving the helm, it will be very interesting to watch for strategy changes.”