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Why Shares of Mastercard Are Falling Today

By Bram Berkowitz – Oct 27, 2021 at 12:53PM

Key Points

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The company's closely linked competitor Visa reported earnings yesterday.

What happened

Shares of Mastercard (MA -0.28%) had fallen more than 6% as of 12:07 p.m. EDT today after the company's rival Visa (V 0.25%) reported earnings yesterday.

So what

For the fourth fiscal quarter of the year, Visa reported earnings per share of $1.65 on total revenue of $6.6 billion. Both numbers beat estimates from analysts. The company's board of directors also recently approved a dividend increase of 17%.

Payments volume at Visa grew 17% from the fourth fiscal quarter of 2020, while cross-border payments volume jumped 38% on a year-over-year basis.

Red line with arrow moving downward.

Image source: Getty Images.

"Our performance was driven by the continuation of the recovery in many global economies and the increased diversification of our revenue with new flows and value added services," CEO Alfred Kelly said in a statement.

However, shares of Visa and Mastercard declined today after Visa CFO Vasant Prabhu said on the company's earnings call that "revenue growth poses the greatest challenge," being "significantly dependent on the pace of the cross-border travel recovery."

Visa expects revenue in 2022 to grow somewhere in the mid-teen-percentage range, while analysts had initially thought the company could grow revenue 20% in fiscal 2022.

Now what

Visa and Mastercard are very similar companies, so if Visa sees slower revenue growth ahead, it is only natural that Mastercard investors might expect a similar outcome. Mastercard reports earnings tomorrow, so we'll find out for sure soon.

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

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