Green Dot Sinks After Short Wal-Mart Extension Sparks Analyst Debate

NEW YORK (TheStreet) -- Shares of prepaid debit card provider Green Dot (GDOT) are falling after the company announced a short-term extension to its deal with Wal-Mart (WMT) . Following the extension, analysts at JPMorgan and Deutsche Bank differed in their take on the impact of the news and on Green Dot's shares.

WHAT'S NEW: Green Dot announced last night in a regulatory filing that it had received an extension of its deal with Wal-Mart, under which Wal-Mart markets and sells Green Dot's prepaid debit cards under the MoneyGram brand name. The terms of the previous deal were extended through December 31, 2015, Green Dot stated The previous agreement was due to expire in May.

BULLISH TAKE: Although the lack of a longer term renewal may worry investors, Wal-Mart and Green Dot probably just need more time to reach a new deal, wrote JPMorgan analyst Tien-tsin Huang in a note to investors today. The extension gives Green Dot more time to reduce its reliance on MoneyGram (MGI) , the analyst added. He kept an Overweight rating on Green Dot.

BEARISH TAKE: Taking a less optimistic view was Deutsche Bank analyst Ashish Sabadra. Wal-Mart appears to be considering awarding the MoneyGram deal to a competitor of Green Dot, although Green Dot is also in the running for a longer term extension, the analyst stated. Sabadra does not know why Wal-Mart was unable to make a long-term decision, but warns that the short-term extension does not bode well for Green Dot. The analyst kept a $24 price target and Hold rating on Green Dot.

PRICE ACTION: In early trading, Green Dot shares dropped nearly 5% to $20.74.

Reporting by Larry Ramer.

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