Green Dot Corp., the issuer of reloadable prepaid debit cards, jumped 36 percent Tuesday after reaching a new five-year deal with Wal-Mart Stores Inc. and authorizing a $150 million stock buyback.
Shares of Pasadena, California-based Green Dot rose $5.45 to $20.76 at 10:35 a.m. in New York, the most since its July 2010 initial public offering.
“With the renewal behind the company on good terms, we are optimistic that it can now refocus its energy on returning to growth,” Tien-tsin Huang, a JPMorgan Chase & Co. analyst, said in a note to clients. “We remain neutral the shares, because our concerns have been less about the renewal risk, but rather the growth prospects of the portfolio since it has been shrinking for several quarters now.”
Green Dot’s board authorized the repurchase of as much as $150 million of the company’s stock, subject to regulatory approval, the bank said Monday. The new deal with Wal-Mart replaces Green Dot’s current agreement, which was scheduled to expire at the end of the year, according to a statement.
“To be chosen again as Wal-Mart’s partner against a wide field of fine competitors brings a wonderful feeling of accomplishment and satisfaction,” Green Dot Chief Executive Officer Steve Streit said in the statement.
Green Dot, which began working with Wal-Mart in 2007, said the new contract with the biggest U.S. retailer took effect on May 1.