Markets

Cashless Growth Pushes Visa, Mastercard Stock Up 50 Pct. In Past Year

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Analysts believe that both Visa and Mastercard have potential to join tech giants like Apple and Amazon in the $1 trillion value club, according to a report by Reuters

Both companies have seen their stock prices soar, fueled in part by online shopping. Visa ranks 7th and Mastercard ranks 11th in the benchmark S&P 500 index. Stocks in both companies went up 50 percent in the last year.

If they continue such gains, both companies will be worth more than $1 trillion by 2023, and they’ll pass companies like Facebook and Berkshire Hathaway.

“Everything travels on their rails,” said Sandy Villere, portfolio manager of the Villere Balanced Fund, a Visa shareholder. “They literally sit in the middle of the banks, consumers and merchants and that has been a really enviable place to be.”

As of the market’s close on Thursday (Jan. 30), Visa’s market value was $449 billion and Mastercard’s was at $324 billion. If those companies reach $1 trillion in value, they’ll join eCommerce giant Amazon, as well as other successful benchmark tech companies.

Over the past fiscal half decade, Microsoft and Visa both doubled revenue. Visa reached $23 billion and Mastercard reached $17 billion. Also, both companies saw adjusted earnings per share double.

In quarterly reporting this week, Visa missed estimates slightly, but Mastercard beat them. Digital purchases are on the rise around the world, accounting for 43 percent of purchases, excluding China. That’s up from 28 percent about a decade ago, said Lisa Ellis, senior analyst at MoffettNathanson. 

“Globally, we still have five to 10 years, at least, to go of penetration,” Ellis said.

Market share for Visa is at 60 percent, and Mastercard is at 30 percent, Ellis said. American Express trails at 8.5 percent.

On the S&P 500, both companies are listed under the information technology sector. They’ve been important in technology share rallies. 

Visa recently agreed to a deal to purchase Plaid for $5.3 billion, and Mastercard said it was going to buy a majority stake Scandinavian payments group Nets, for around $3.19 billion.

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PYMNTS STUDY: THE CROSS-BORDER MERCHANT FRICTION INDEX – JUNE 2020

The PYMNTS Cross-Border Merchant Friction Index analyzes the key friction points experienced by consumers browsing, shopping and paying for purchases on international eCommerce sites. PYMNTS examined the checkout processes of 266 B2B and B2C eCommerce sites across 12 industries and operating from locations across Europe and the United States to provide a comprehensive overview of their checkout offerings.

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