Marqeta (NASDAQ:MQ) saw its stock fall sharply by 7% following a critical report from short seller J Capital Research, which questioned the sustainability of the company’s business model and raised regulatory concerns. The report portrays Marqeta as a payment processor that heavily depends on partnerships with smaller banks within the Banking as a Service (BaaS) sector—a segment currently facing increased regulatory pressure and several recent shutdowns.

J Capital’s investigation draws attention to an ongoing FBI probe into Sutton Bank, one of Marqeta’s banking partners, over possible anti-money laundering (AML) compliance issues. The analysis also highlights the regulatory challenges faced by Marqeta’s largest client, Cash App, suggesting that any disruption in this partnership could severely impact Marqeta’s operations.

The report argues that Marqeta is being squeezed as larger banks start bypassing intermediaries like Marqeta. Attempts by the company to reduce its dependence on Cash App’s processing business have reportedly fallen short. Investors are further concerned about Marqeta’s concentrated revenue sources and the uncertain outlook for the BaaS industry.

J Capital points to a shrinking backlog of contracted revenue since Q1 2024, signaling potential trouble ahead. Despite reported growth in gross profits, the firm criticizes Marqeta’s declining margins and heavy reliance on a single client.

Adding to the negative sentiment, the report likens Marqeta to an outdated “dinosaur” in the fintech space. It also highlights recent leadership upheaval, noting CEO Simon Khalaf’s departure in February 2025 as a sign of internal instability.

Today’s stock slide reflects mounting investor anxiety over Marqeta’s ability to navigate regulatory hurdles and sustain revenue amid a turbulent BaaS environment. With challenges mounting both industry-wide and internally, Marqeta’s prospects for the upcoming quarters and fiscal 2025 remain clouded with uncertainty.

Marqueta stock price