What happened

Shares of credit card giant Visa (V -0.20%) had dropped 4.5% as of 10:40 a.m. EDT Wednesday despite the company beating earnings in its fiscal fourth-quarter 2021 earnings report released last night.

Heading into Q4, analysts had forecast that Visa would earn $1.54 per share on revenue of $6.5 billion. As it turned out, Visa "beat" on both the top and bottom lines, reporting adjusted profit of $1.62 per share on sales of $6.6 billion --and when calculated according to generally accepted accounting principles (GAAP), profit of $1.65 per share -- but that wasn't good enough for investors.  

Red down arrow on a black backdrop of tickertape prices.

Image source: Getty Images.

So what

Visa's revenue beat represented 29% year-over-year growth from last year's Q4 revenue, and GAAP profits surged 68% year over year. Visa's full-year results were also good, but less so. Full-year revenue rose 10%, and full-year profit, 13%.  

Visa management credited "the continuation of the recovery in many global economies and the increased diversification of our revenue with new flows and value added services" for helping it produce the strong numbers, and predicted that "looking ahead, Visa is even better positioned for the future as cross-border travel recovers and we continue to drive the rapid growth of digital payments."

Now what

So why weren't investors satisfied? Why is Visa stock tumbling today?

One word: Guidance.

As TheFly.com reports this morning, Visa revealed in its post-earnings conference call -- but not in its official earnings press release -- that although Visa's "business has been on a recovery track for the past three to four quarters [it is] not back to normal yet globally. ... Assuming current trends are sustained through December," says the company, "we would expect first-quarter net revenue growth in the high teens."

Now, that sounds pretty good at first, but here's the thing: "High teens" growth would be a marked deceleration from the 29% revenue growth that Visa enjoyed in Q4. It's also a huge step down from the $6.95 billion in sales that analysts have been forecasting for Q1 -- which would have represented 36% revenue growth from the $5.1 billion in revenue Visa recorded in the first quarter last year, according to data from S&P Global Market Intelligence. Indeed, if you do the math, "high teens" revenue growth is a prediction of growth only half as fast as what Wall Street was hoping Visa would promise.

Viewed in that light, it's no wonder investors are disappointed today.