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Stock Wars: Mastercard Vs. Visa – Moelis (MC)

Stock Wars: Mastercard Vs. Visa
Written by publishing team

Benzinga’s weekly Stock Wars matches up with two leaders in a key industry sector with the goal of identifying the best investment company.

This week, the duel is between two leaders in the credit card world: MasterCard Corporation (NYSE: MA) and Visa company (NYSE: V).

MasterCard Status: The roots of this company go back to 1966 when Marine Midland Bank It brought together a number of regional banks and bank card associations to form the Bank Card Association as a competitor to Bank of America Corp (NYSE: BAC) BankAmericard, the pioneer of Visa. While Interbank quickly grew to 150 members by 1967, it had problems creating a satisfactory marketing brand until the endeavor was renamed Master Charge in 1969. The MasterCard name was adopted in 1979.

Today, New York-based Purchase Corporation provides payment processing network solutions in more than 210 countries and territories under the MasterCard, Maestro and Cirrus brands. MasterCard conducted an initial public offering in 2006.

The company has positioned itself as a leader in the data space with its Mastercard Spending Pulse reports, has expanded into the crypto space with its Mastercard Start Path Crypto program focused on blockchain technology startups and its recent acquisition of encryption, a cryptocurrency intelligence company that provides digital asset security and fraud solutions to banks, exchanges, and other financial institutions.

MasterCard has been on an acquisition spree recently. Among its recent purchases are Personalization Platform and Decision Engine Company dynamic yield From McDonald’s Corp. (NYSE: MCD), Arcus FI, which provides real-time bill payment solutions and other payment applications across Latin America; And any, an open European banking technology provider that provides single and secure API access to banks and fintech companies.

Mastercard also gained notice in October with its debut touch card, a new card standard accessible to blind and partially sighted people who are unable to identify engraved credit and debit cards through touch.

In its latest earnings report, third-quarter data published Oct. 28, Mastercard reported $5 billion in net revenue, up from $3.8 billion a year earlier, and net income of $2.4 billion, compared to $1.5 billion a year earlier. The company’s diluted earnings of $2.44 per share were up from $1.51 in the third quarter of 2020.

“In terms of how people spend, current card volumes continue to improve as people go out and shop more while we continue to see sustained strength in non-current card spending,” the CEO said. Michael Maybach In a third-quarter earnings call. “Regardless of whether people want to shop online or in person, our solutions support that choice and put us in a good position to engage in both directions.”

Mastercard shared closed trading on Wednesday at $361.29, sandwiched between the 52-week range of $306 and $401.50.

Related Link: The Complete Benzinga Stock Wars Series

Visa status: This company’s roots go back to the September 1958 launch of the BankAmericard credit card program from Bank of America. When Interbank began licensing its cards to financial institutions, Bank of America followed suit with the BankAmericard program and the bank joined the Master Charge program. In 1970, BankAmericard was created as an independent entity, which was renamed Visa in 1976.

Today, San Francisco-based Visa provides payment processing network solutions in more than 200 countries and regions. The company held its initial public offering in 2006, the same year that MasterCard did.

Unlike MasterCard, Visa presents itself as a data provider via US Spending Momentum Index. It is also moving more in the field of cryptocurrency.

Earlier this month, it launched global crypto consulting practice, A show at Visa Consulting & Analytics promoted as a way to “help clients and partners advance their crypto journey.” In March, Visa became the first major payment network to settle transactions in stablecoins in US dollars, and in February the company partnered with First Avenue, a digitally indigenous online bank focused on building the generational wealth of the black community, is in a pilot program featuring Visa’s suite of crypto APIs. The program enables First Boulevard customers to buy, hold, and trade their owned digital assets Morsi, a federally approved digital asset bank.

Recent Visa acquisitions have been limited to the purchase of currencycloud, a London-based platform that enables banks and fintech companies to offer foreign exchange solutions for cross-border payments, and tink, an open banking platform that enables financial institutions, fintech companies and merchants to build customized financial management tools, products and services for European consumers and businesses based on their financial data.

In its latest earnings report, fourth-quarter data published October 26, Visa reported net revenue of $6.5 billion, unchanged from the previous year, and net income of $3.58 billion, up from $3.52 billion a year earlier. The company’s diluted earnings of $1.65 were just a 3 percent increase from $1.62 in the fourth quarter of 2020.

“Despite the backdrop of a global pandemic, this quarter we also achieved a record total global payment volume of $2.8 trillion,” said the Chairman and CEO. Al Kelly In a fourth-quarter earnings call. “Volume across borders, excluding within Europe, was 86% from 2019, 4 points better than Q3 and 46% higher year-over-year. Transactions processed was 124% in 2019, up 4 points from Q3 and up 21% on an annual basis.”

Visa shares closed Wednesday at $218.17, sandwiched between the 52-week range of $190.10 and $252.67.

Verdict: Rarely has the Stock Wars duel been matched equally as this comparison of Mastercard and Visa. Both companies are solid and predictable – that’s a compliment – and they both check the right boxes to enable their growth.

The only problems facing these companies are the current situation of COVID-19 and inflation. With coronavirus infections increasing and many countries going into lockdown, it is not clear how the financial performance of MasterCard and Visa will be affected in early 2022. Also, with inflation pushing prices to new and unhappy highs, it is unclear whether consumer spending will slow during the first period. of the new year.

Also, it’s hard not to notice that the stocks of the two companies are in the middle of their 52-week ranges. Looking at their most recent quarterly reports, it is easy to assume that they will be headed toward 52-week highs.

Thus, the verdict in a Stock Wars duel is a tie You can’t go wrong with having either company in your portfolio, although investors and traders worried about when the start of 2022 will end may want to take a wait-and-see approach here.

Photo: CircOD/Pixabay

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