What happened
Shares of Mastercard (MA +0.53%) rose 16.6% in November, according to data provided by S&P Global Market Intelligence.
The financial services company's stock has recovered more than 50% from its March lows and is up around 11% year to date.
Image source: Getty Images.
So what
Mastercard reported a weak set of earnings for its third quarter, as travel spending remained depressed due to closures resulting from the COVID-19 pandemic. Net revenue fell 14% year over year to $3.8 billion, while net income declined by 28% year over year to $1.5 billion. Despite the fall in net income, the company raised its quarterly dividend from $0.33 to $0.40. CEO Ajay Banga, however, remarked that the company was making good progress in helping both customers and consumers adapt to the new normal, as Mastercard continues to invest in its digital capabilities to deliver differentiated solutions.
The company released its updated fourth-quarter operating metrics last November, and the number of transactions continued to see year-over-year growth. Although cross border volumes for the week ending Nov. 21 were still down 29% year over year, the company is seeing spending levels remaining steady with some markets approaching growth.
Pharmaceutical companies have been in a race to develop a COVID-19 vaccine, and several have already announced promising candidates with efficacy rates higher than 90%. If these vaccines are successfully deployed to badly affected populations, the world could see a slow but gradual recovery resulting in an easing of border closures. This development will be positive for Mastercard over the near term.
Now what
Mastercard president Michael Miebach said he believes that e-commerce will remain at higher levels after the pandemic, as buyer behavior has been altered permanently. Mastercard's research shows that almost seven in 10 people believe the shift to electronic payments will be permanent. Mastercard has partnered with companies such as PayPal Holdings and digital banks around the world to broaden its range of services and grow its customer base.
Some initiatives include enabling smartphones to accept QR codes and make remote payments, introducing a "buy now, pay later" program to assist issuers with installment payment options, and tapping artificial intelligence and computer vision to create enhanced shopping experiences.
