Visa Sinks the Dow Jones

Pandora also dives on earnings worries in a downbeat end to the week for investors.

Jul 25, 2014 at 2:59PM
Daily Fool

The market's weathering a tough end to the week as earnings season pushes on, with the Dow Jones Industrial Average (DJINDICES:^DJI) enduring withering losses so far today. As of 2:30 p.m. EDT, the Dow has dropped by more than 130 points, with all but a handful of stocks in the red. Visa (NYSE:V) has been the biggest drag on the Dow so far: The credit card giant has plunged about 4%. Outside the Dow, earnings season has punished some of the market's top stocks, with Pandora (NYSE:P) plummeting 11% so far. Let's catch up on what you need to know.

Is Visa's drop justified?
Visa's big drop today shows the power of stocks with high price tags on the Dow Jones. Visa, with a price of more than $200 per share, has the most influence on the price-weighted Dow Jones -- and on days when this stock takes a big hit, the Dow goes right along with it.

Credit Cards

Source: Wikimedia Commons.

And yet Visa actually managed to post respectable earnings for the second quarter. The credit card giant released quarterly earnings of $2.17 per share, gaining 11% year over year and topping average analyst expectations of $2.10. The company's revenue also impressed with a strong 5.1% gain that meet Wall Street's predictions. Total transactions jumped by a whopping 11% as customers embraced credit cards over cash, with payments jumping 12% for the quarter.

Yet it wasn't earnings that soured investors on this stock today, but guidance. The company pared its revenue outlook for the full year down to 9%-10% growth from an earlier projection of 10%-11%. Visa cited the strong dollar, along with political and economic instability in Eastern Europe and the Middle East, and the company announced that it expects sizable losses in Russia in the near future.

For long-term investors, however, the small drop in revenue guidance isn't worth a 4% stock plunge. Visa's strong second quarter shows that consumers are flocking back to credit cards amid the ongoing American economic recovery. So long as that trend continues, this company will be in prime position to capitalize -- and keep its stock moving higher overall.

Outside the Dow, Pandora's stock has endured the same sort of investor wariness today following its own earnings report. The company's overall net losses widened in its most recent quarter, with losses accelerating by more than 70% year over year to $11.7 million -- a much sharper headache than the $6.8 million Pandora lost this quarter a year ago.

In a lone bright spot, revenue at Pandora has picked up, climbing 38% as advertising sales jumped by 39%. Active listeners rose substantially as well, with listener count growing by 7.5%. Still, until Pandora can turn revenue and increasing users into growing profit, rather than losses, this stock could be in trouble -- particularly after dropping more than 14% over the past six months. With competition mounting in the space, Pandora needs to find new routes to unlocking strong growth.

Risk-free for 30 days: The Motley Fool's flagship service
Tom and David Gardner founded The Motley Fool over 20 years ago with the goal of helping the world invest...better. Their flagship service, Stock Advisor, has helped thousands of investors take control of their financial lives and beat the market. Click here to sign up today.

Dan Carroll has no position in any stocks mentioned. The Motley Fool recommends Pandora Media and Visa. The Motley Fool owns shares of Pandora Media and Visa. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers