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Why Visa Stock Lost 11% in March

By Demitri Kalogeropoulos – Apr 7, 2020 at 9:34AM

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Lower spending in categories like travel likely impacted the credit card giant's business last month.

What happened

Visa (V 1.09%) stock modestly outperformed a weak market last month by dropping 11% compared to a 12.5% decline in the S&P 500, according to data provided by S&P Global Market Intelligence.

That move helped keep the financial services giant just ahead of broader markets so far in 2020, with a 19% loss year to date.

A woman shops online using her credit card.

Image source: Getty Images.

So what

Visa was caught in the general market turmoil after COVID-19 forced the temporary dampening of economic activity around the world last month. With major spending categories like restaurants, travel, and retailing nearly halted, the credit card giant likely saw a significant decline in its business last month. Yet Wall Street's main worry is that this temporary drop will mature into a recession that harms the business for more than just a single quarter.

Now what

Visa said in early March that it had seen only a minor impact on its business to date, yet that was before conditions deteriorated in the middle of the month. As a result, investors might have to wait until the company's second-quarter earnings release -- likely in late April -- to hear details about how coronavirus is affecting spending trends, and when that slump might give way to rebounding sales gains.

Demitrios Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Visa. The Motley Fool has a disclosure policy.

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