Prepaid debit card provider Green Dot Corp. banks on Wal-Mart Stores Inc.’s customers for two-thirds of its business. So the news that Wal-Mart would add a competing product to its offerings was a red flag for Green Dot’s investors.

New York credit card giant American Express Co. announced last week that its Serve prepaid debit card would be sold in 4,100 of Wal-Mart’s U.S. stores. Serve offers free cash reloads and is priced $1 cheaper than Green Dot’s cards. The deal will give Serve the largest free cash-reload network of any prepaid provider, with about 19,500 locations across the country.

The news sent Green Dot shares down 12 percent to close at $17.15 the week ended April 23, making it one of the biggest losers on the LABJ Stock Index. (See Page 46.) The Pasadena company’s stock was down 32 percent year to date.

Tien-tsin Huang, an analyst at New York investment bank JP Morgan Chase & Co., said the new product is particularly problematic for Green Dot given Green Dot’s reliance on the Bentonville, Ark., retail behemoth. In a report on the company issued last week, Huang pointed to the news that Dallas money-transfer firm MoneyGram International Inc.’s stock has fallen nearly 30 percent since Wal-Mart announced that it would be launching a competing service with a rival company. MoneyGram only receives about 25 percent of its revenue through Wal-Mart, a significantly lower share than Green Dot.

“This is an unfriendly reminder of the challenges of high Wal-Mart customer concentration,” Huang wrote.

Green Dot’s stock price was also hurt by the announcement that Chief Executive Steven Streit sold 21,000 shares of the company earlier this month, pocketing more than $400,000 in proceeds. The company declined to speak with the Business Journal for this article, citing the mandatory quiet period before it releases quarterly earnings this week.

The recent stock plunge was not the first for Green Dot due to news involving Wal-Mart and American Express. The stock plunged 20 percent Oct. 8, 2012, after Wal-Mart announced that American Express’ Bluebird prepaid card would be sold at 4,000 of its stores. Serve is similar to Bluebird, although Serve provides additional perks such as mobile check deposits and use of an ATM network with no fees.

But Green Dot’s share price rebounded in late 2012 and early last year as fears that the competition would crush the company proved to be overblown. In light of last week’s announcement, investors in the company for the long run hope this will prove just another bump in the road.

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