Mastercard is Friday's IBD Stock Of The Day. The payments giant and Dow Jones rival Visa both beat their recent earnings forecasts on strong cross-border volume despite the banking panic. Mastercard stock has hovered in a buy zone for a few weeks following its mid-April breakout, making a new bullish move Friday. MA stock was added to SwingTrader list of short-term trades.
Visa and Mastercard don't carry balances on their books, unlike American Express and Discover Financial. Instead, Mastercard and Visa make money on credit and debit card transaction fees. Issuing banks such as JPMorgan Chase carry the upside and downside risk.
Purchase, New York-based Mastercard acted as a card issuer for Silicon Valley Bank, whose failure helped spark the whole bank crisis. Still, Mastercard avoided the pain.
"Our current products continue to operate normally," chief product officer Craig Vosburg said at the Wolfe Research conference on March 14 in the days after regulators took hold of the bank. At the time, Vosburg said Mastercard was encouraged by regulatory action and remained in close contact with the FDIC to ensure its business and transaction settlements operated normally.
Mastercard Earnings
The company beat forecasts for its Q1 results on April 27. Adjusted Mastercard earnings rose 1.4% to $2.80 per share on an 11% revenue jump to $5.7 billion. Analysts expected earnings to dip 1.8% to $2.71 per share on 8.4% revenue growth to $5.64 billion.
Mastercard's net payment network revenue increased 7% over the year. Cross-border volume leapt 35% on a local currency basis. Gross dollar volume grew 15% on a local currency basis to $2.1 trillion. Mastercard's switched transactions, which include authorization, clearing and settlement transactions, increased 12% from last year.
Visa also cleared expectations by posting a 20% earnings jump to $2.09 per share on 11% revenue growth to $8 billion. Visa's cross-border transaction volume spiked 24%. Payments volume and processed transactions increased 10% and 12% from 2022, respectively.
Mastercard stock received a host of price target upgrades following its earnings report. Analysts noted consumer spending and global travel trends remain strong, citing cross-border payment trends. Mastercard's value-added services, including data analytics, consulting, marketing services and loyalty solutions, are seeing increases in demand and provide attractive qualities that should help maintain momentum.
Analysts see solid Visa and Mastercard earnings growth in 2023 and 2024
Expanded Crypto Offerings
Mastercard announced the launch of its Mastercard Crypto Credential service on April 28 at the CoinDesk Consensus 2023. The new service ensures transactions between users' wallets are verifiable and compliant with regulatory requirements, such as the Financial Action Task Force's (FATF) travel rule. It also marks Mastercard's first cross-border use case, CoinDesk reported, allowing users to send digital assets between countries.
Mastercard partnered with various crypto wallet providers on an initial project enabling transfers between the U.S., Latin America and the Caribbean, according to CoinDesk. The company is also seeking more partnerships with crypto firms as it expands its cryptocurrency payment card program, Reuters reported.
MA Stock
Mastercard stock is trading in the buy zone for its double-bottom base after surpassing the 369.25 buy point on April 13. The current buy zone, which extends 5% beyond the buy point, stretches to 387.60.
On Friday, MA stock bounced from its 21-day exponential moving average and cleared a quasi-handle, offering a new buying signal. Mastercard set a 15-month closing high.
MA stock was added to the SwingTrader list on Friday.
Mastercard has an 82 EPS Rating. The stock's relative strength line is off its highs from January and Mastercard stock has an 84 RS Rating. MA stock has a 96 Composite Rating out of a best-possible 99. The Composite Rating combines a number of technical indicators into one easy-to-read score.
Visa stock bounced off its 50-day moving average on Friday and pushed back into the buy zone for its own double-bottom base. V stock initially broke out on April 3 after surpassing the 277.51 buy point.
MA stock ranks second in the Finance-Credit Card/Payments Group according to the IBD Stock Checkup. It only trails Brazil's StoneCo.
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