Mastercard Stock ( NYSE:MA )
Mastercard ( NYSE:MA ) is a high-quality company with a high multiple in the market. Given the current market environment, this multiple is not justified by its growth prospects. The market is not pricing in some risks to the company’s strong moat. Investors should remain neutral on this name until a better opportunity to purchase shares arises.
Growth Prospects Are Dim
Mastercard reported a 15% increase in revenue and a 14% increase in net income in their most recent quarter . Given the macro environment, these are solid figures. It’s challenging to see Mastercard maintaining this level of growth in the future, primarily because merchants are starting to push back on interchange fees. Mastercard’s inability to raise interchange rates removes a growth lever for the company. They may also be forced to reduce transaction fees, resulting in margin compression.
At the moment, Mastercard’s revenue and earnings are primarily determined by total nominal transaction value. The company is strong, but it has captured all of the market it can realistically achieve, and it cannot raise interchange rates any further. Mastercard is a stable and predictable company, but relying on spending growth carries some risks.
Long-Term Dangers
The market believes Mastercard has a strong moat, but some potential threats are on the horizon.
Legislative scrutiny poses a significant threat to Mastercard and Visa (NYSE:V). Legislative pressure grows as more merchants criticize the companies for the amount of each transaction they accept. Regulators dislike the major card networks and will likely take more action against them over the next decade. This should reduce t...
Click here to read the full article on PressReach.com .Subscribe to the PressReach RSS feeds:
- Featured News RSS feed
- Investing News RSS feed
- Daily Press Releases RSS feed
- Trading Tips RSS feed
- Investing Videos RSS feed
Follow PressReach on Twitter
Follow PressReach on TikTok
Follow PressReach on Instagram
Subscribe to us on Youtube