Visa & Mastercard STOCK CRASH – Is This the Best Time to BUY?

Summary

This video provides an in-depth analysis of Visa and Mastercard, comparing their recent stock performance, intrinsic valuations, and potential growth. It explores the threat posed by stablecoins and blockchain technology, which could disrupt traditional payment networks. Visa is considered the safer investment with a margin of safety and a reasonable upside, while Mastercard offers more growth potential but lacks a strong margin of safety at current prices. The video discusses key financial metrics and projections, highlighting Visa's stability and Mastercard's growth prospects. It concludes with insights on both companies' future outlook and their appeal to different types of investors.

Takeaways

• 😀 Visa and Mastercard are down by 9%, presenting a potential 'buy the dip' opportunity for investors.
• 😀 Both Visa and Mastercard have high institutional ownership, suggesting investor confidence.
• 😀 Super investors have been increasing their positions in both companies, reflecting strong support from the investment community.
• 😀 Stable coins and blockchain technology pose a potential threat to Visa and Mastercard’s dominance in the payment industry.
• 😀 Companies like Amazon and Walmart exploring stable coins could bypass traditional payment systems and reduce transaction fees.
• 😀 Visa consistently shows strong financial metrics, including free cash flow, sales growth, and high profitability.
• 😀 Visa focuses on returning value to shareholders through buybacks and dividends, enhancing long-term appeal.
• 😀 Mastercard has a higher growth potential, though it trades at a higher valuation, meaning it carries more risk.
• 😀 Visa is valued with an 11% upside, offering a reasonable margin of safety for investors.
• 😀 Mastercard shows a higher upside (17%) but lacks the same margin of safety, making it a riskier growth play.
• 😀 Visa offers a more conservative investment option, while Mastercard is more suited for investors seeking growth with higher risk.

Q & A

What is the current performance of Visa and Mastercard stocks?

Both Visa and Mastercard have seen recent declines of around 5%, but they continue to be backed by strong institutional investors and analysts, who view this as an opportunity to 'buy the dip.'

How have Visa and Mastercard performed over the last decade?

Visa has seen a nearly 400% increase in stock value over the past decade, while Mastercard has outperformed even more, increasing by 506% during the same period.

What potential threat are Visa and Mastercard facing in the payment network sector?

Stablecoins, particularly those launched by companies like Walmart, Amazon, and other major players, are emerging as a threat. These stablecoins could bypass traditional card networks like Visa and Mastercard.

What is the role of regulatory developments in the payment sector for Visa and Mastercard?

Recent regulatory moves, including crypto-related legislation passed by the Senate, and the entry of major institutions like JP Morgan into the stablecoin space, could disrupt Visa and Mastercard’s market dominance.

What is the valuation of Visa and its growth outlook?

Visa is currently trading at a forward P/E of 28.3, which is considered reasonable. The company has a fair margin of safety and is expected to grow by 10%, with analysts projecting a 19% upside to $405 per share.

How does Mastercard's valuation compare to Visa's?

Mastercard has a slightly higher forward P/E of 29, indicating a higher valuation. Although the company has solid growth potential, it lacks the margin of safety that Visa offers.

What are the intrinsic values and upside potential of Visa and Mastercard?

Visa’s intrinsic value is estimated at $379, offering an 11% upside at the current price level, with analysts projecting a 19% upside. Mastercard’s intrinsic value is $544, with a smaller potential upside of 1%, but could rise to 17% depending on growth assumptions.

What is the current institutional ownership of Visa and Mastercard?

Visa has 82% institutional ownership, while Mastercard has a higher institutional ownership at 97%. Both companies are favored by institutional investors.

How are super investors involved with Visa and Mastercard?

Super investors continue to hold large stakes in both Visa and Mastercard, maintaining confidence in these companies despite recent declines.

Which stock seems to offer a better investment opportunity: Visa or Mastercard?

Visa appears to offer a better investment opportunity due to its stronger margin of safety, fair valuation, and significant upside potential. However, Mastercard may appeal to those seeking higher growth despite its higher valuation and lower margin of safety.