Shares in prepaid card issuer Green Dot tumbled today amid fears that the firm would need to keep spending heavily to stave off new competitors, such as T-Mobile.

Chief executive officer Steve Streit promised during a Jan. 30 conference call that Green Dot will keep a tighter leash on costs in 2014 after the company made extraordinarily large investments in the second half of last year.

But analysts expressed skepticism about Green Dot's earnings power, in part because the Pasadena, Calif., company's guidance for 2014 came in unexpectedly low. The company projects that it will earn between $1.22 and $1.28 per share this year, roughly 15 to 21 cents below what analysts were expecting.

Greg Smith, analyst at Sterne Agee, lowered his 2014 earnings estimate for Green Dot by three cents, to $1.27 per share.

"We anticipated heightened expenses, but they still came in above what we were looking for," he wrote in a note to clients.

Green Dot's stock price was down by as much as 21% this morning following the release of a fourth-quarter earnings report that analysts found disappointing. By late in the trading day, shares had partially rebounded but were still down 16%.

Green Dot, founded 15 years ago, touts itself as the inventor of the prepaid card. But the market continues to attract a range of new competitors, including banks, retail chains like Walgreens and, most recently, mobile phone carriers such as T-Mobile.

During yesterday's call with analysts, Green Dot CEO Streit acknowledged the increasing competition, but also sought to downplay the threat that it poses to his company.

"Some new competitors will find traction," he said, "and others will fail."

Streit then suggested that JPMorgan Chase, which made a splash when it introduced the low-fee Chase Liquid card, may fall into the latter category.

"The launch of Liquid in 2012 caused a lot of understandable investor concern," Streit said. "So where is Liquid today? While Chase doesn't disclose business metrics for Liquid, based on our own research, it appears that Liquid is no longer being actively promoted in Chase branches or mass media."

Trish Wexler, a JPMorgan Chase spokeswoman, said that her company continues to market Liquid to customers in Chase branches. She acknowledged that the bank is not doing any television advertising for the prepaid card, but said that it is still marketing the product through email and at Chase ATMs.

The New York banking giant announced earlier this month that it is looking to sell another part of its prepaid card business, which does not include Liquid.

Larry Berlin, an analyst at First Analysis, said that JPMorgan Chase's apparent retreat does not mean Green Dot can breathe easy.

"While the major competitors that appeared on the horizon a year ago have dissipated to a degree, enough new players looking into the space to keep the competitive threat," he said in an interview.

Green Dot's recent investment binge came largely in reaction to the end of its exclusivity deals with certain retail chains. In the fourth quarter, operating expenses were up nearly 16% from the prior year, to nearly $142 million, largely due to costs associated with selling its cards at other retailers, boosting its presence in check cashing stores, and launching new products at Walmart.

During the call with analysts, Green Dot executives walked the line between arguing that investment spending is essential and acknowledging that the need for controlling costs.

Recently hired chief financial officer Grace Wang said: "I'm stringent on cost control and holding division leaders accountable for their numbers. At the same time, I understand the balance between executing discipline and investing where needed to ensure we have the platform to support future growth."

Mark Palmer, an analyst at BTIG, argued that today's sell-off was an overreaction.

"It's clear that competition has picked up. But what has been impressive has been Green Dot's resilience in the fact of that increased competition," he said.

Green Dot's revenues rose by 4% in the fourth quarter over the same period a year earlier, and management is predicts revenues will rise another 10% to 12% this year. 

Gross dollar volume on the company's cards grew by 3%, and purchase volume increased by 2%. Those increases were smaller than they've been in the three most recent quarters.

Green Dot has previously weathered a far bigger drop in its share price than it suffered Friday.

After the company reduced its earnings expectations in July 2012, its stock price fell by 60% in a single day. But then during 2013, the value of Green Dot shares more than doubled.

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