When the Justice Department announced anti-competitive charges against Visa (V), it created a good buy price for investors. Last week, V stock found support at $270 and climbed higher from there when bargain hunters stepped in.
The Justice Department is accusing Visa of running a debit card monopoly. On that logic, MasterCard (MA) also runs a similar monopoly. Yet the two card firms compete against one another. MA and V stocks trade at similar market capitalization and price-to-earnings multiples. Investors may avoid choosing either by considering both firms.
Anytime markets worried that smaller fintech competitors would take their market share, the companies would post strong results. Visa and MasterCard have a strong global network, superior security, and attractive customer service. Firms like PayPal (PYPL) and Block (SQ) do not have anywhere near that level in any of the categories.
On Sept. 12, Mastercard bought Recorded Future for $2.65 billion. The global threat intelligence company will strengthen the firm’s identity, fraud prevention, and cybersecurity services.
In August, the Federal Reserve Bank of New York reported that credit card debt topped $1.14 trillion in the second quarter. This usually costs the consumer 20% in annual interest costs. Since consumer debt growth will likely continue, shareholders benefit when profitability for Mastercard and Visa increases with it.
