Mastercard stock opened lower while the broader market was ahead.
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Mastercard beat Wall Street earnings estimates by 6% in the fourth quarter and edged revenue forecasts by 0.8%. But that doesn’t appear good enough to lift the stock.
Shares of Mastercard (ticker: MA) were flat in early trading, while the broader market was rallying, with the S&P 500 up 1.7%.
Mastercard’s fourth-quarter profit came in at $2.35 a share, rising 43% from a year earlier and topping consensus forecasts for $2.21, according to FactSet. Net income rose 41% to $2.3 billion on a 27% gain in revenue to $5.2 billion. Sales topped estimates by 0.8%, though that included a three percentage-point benefit from acquisitions.
“We had a strong fourth quarter as spending trends continued to improve, with Q4 cross-border spending now above prepandemic levels,” said CEO Michael Miebach.
Mastercard said that cross-border payment volumes—a crucial, high-margin revenue source—rose 53% from a year earlier. The card network said it processed $2.1 trillion in gross dollar volume in the quarter, up 23%.
None of this seemed to impress investors, however.
One concern is that payment volumes in January are tracking below fourth-quarter levels. Mastercard said transaction volume on its card network was up 27% so far this month, compared with January 2021. That was below the 31% year-over-year gain in the fourth quarter.
Cross-border payment volumes are up 47% this month, compared with 53% in the fourth quarter. And cross-border travel-related payments still aren’t back to prepandemic volumes, hovering around 77% of 2019 levels in January, tracking slightly below the 79% level of the fourth quarter.
Mastercard also issued a mixed first-quarter forecast, saying revenues would be at the high end of its high-teens forecast, while operating expenses would be at the “high end of high single digits,” excluding acquisitions. And Mastercard didn’t raise its three-year guidance, reiterating net revenue growth in the high teens and earnings growth in the low 20s.
Mastercard’s guidance was the biggest risk for the stock heading into the quarter, said Mizuho Securities analyst Dan Dolev. “Unfortunately, this issue became a self-fulfilling prophecy as FY top-line guidance fell short of expectations,” he wrote.
The company’s full-year 2022 revenue guidance was also disappointing, he added, with the market expecting 20% growth, against the company’s high-teens forecast.
Mastercard and its chief rival Visa (V) are edging the broader S&P 500 this year, with Mastercard down 4.1% and Visa off 5% against an 8% decline in the S&P 500 before today’s market activity. Still, they are both high-multiple tech stocks, a sector of the market that is being punished these days as rising interest rates weigh on valuations.
Visa is a top Barron’s stock pick for 2022. It’s scheduled to report earnings after the close today, giving investors more insights into how the card networks are faring.
Write to Daren Fonda at [email protected]
