What happened
Shares of Visa (V 0.05%) climbed 15.8% in November, according to data provided by S&P Global Market Intelligence.
Shares of the financial services company have recovered more than 50% from the March lows, and are up around 10% year to date.
Image source: Getty Images.
So what
Visa's fourth-quarter financial performance continued to reflect the negative impact from the COVID-19 pandemic, with net revenue down 17% year over year and net income plunging by 29% year over year. The weak numbers were mainly due to declines in payment volumes and lower cross-border transactions as borders remain shut. However, weekly operating metrics have shown a gradual improvement, with processed transactions for the week of Oct. 21 hitting close to 6% year over year growth, as compared to early July when it was just 1% higher year over year. In a sign of confidence, Visa also declared a slightly higher quarterly dividend of $0.32 per share, up from $0.30 in the previous fiscal quarter.
Visa CEO Alfred Kelly commented that e-commerce volumes, excluding travel, continued to grow, showing evidence of consumers' migration to online payments. Payments and cross-border volumes displayed improvement as Visa exited the fourth quarter, an encouraging sign that accompanies the acceleration of the use of digital payment methods via Visa Direct.
These statistics show that Visa should continue to benefit from increased flows through online payment channels catalyzed by the pandemic, even as it awaits the reopening of borders if a successful vaccine can be distributed globally.
Now what
Visa has been busy working with various partners to increase its reach and customer base. The company is working with PayPal Holding's (PYPL -1.14%) Venmo credit card to access more than 60 million users, enabling them to shop, split purchases, and earn cash back where Visa is accepted. Visa has also partnered with Shopee, the e-commerce platform under Sea Limited (SE -0.69%), to tap on its large Asian user base with a co-branded card.
Visa has also been busy on the financial technology front. In late November, it announced a partnership with Conferma Pay, a provider of virtual payments technology, to offer a suite of business-to-business solutions for its customers. Multiple deals were also signed in the last three months with digital wallet providers in Russia, Cambodia, Korea, Argentina, and Pakistan, providing Visa with additional access to "tens of millions" of potential users.
Investors may be put off by the weaker earnings in the short term, but Visa's business development efforts should bear fruit for the company in the years to come. The company presents an interesting investment proposition over the long term for investors who believe in the company's ability to continue to do well.
