Mastercard (MA -0.10%) shares had a strong December, rising by 14.1%, according to S&P Global Market Intelligence.
For the month, the payment processor outperformed the S&P 500 -- the index rose about 5.6% in December. For the year, though, Mastercard finished barely in the black, up 1.2%, while the S&P 500 gained 26.9%.
Last year was a difficult one for Mastercard, particularly during November, when its stock price dropped by about 17% over the last two weeks of the month due to a combination of worries about how inflation, supply chain issues, and the omicron coronavirus variant would impact the economy and holiday spending. The stock also may have been dragged down by Amazon's decision to stop accepting Visa credit cards issued in the U.K. due to high transaction fees -- even though Mastercard had nothing to do with those cards.
But Mastercard performed better in December as fears about lighter holiday spending proved unfounded. In fact, according to Mastercard's SpendingPulse survey, spending was up 8.5% this holiday season compared to last year and up 10.7% compared to 2019. Online sales rose 11% year over year and 61.4% compared to 2019. This spending surge helped Mastercard finish off 2021 strong.
Mastercard's stock experienced one of its most challenging years in a decade in 2021, with shares up just 1.2% for the year. Only by virtue of that December bounce did it avoid its first annual negative return since 2010.
The company is facing increased competition from payment companies, digital wallets, and buy now, pay later (BNPL) providers, but it has been adapting. Last year, it launched Mastercard Installments, a BNPL service, and formed a partnership with the fintech Bakkt to offer cryptocurrency solutions on its vast network. It also acquired Aiia to expand its open banking capabilities.
As we move into 2022, Mastercard should be in good shape. The U.S. economy is expected to grow by 3.5% as measured by the GDP, although that growth could be impeded by COVID-19, inflation, and other issues. Another factor to watch is travel spending, particularly business travel, which has been way down over the past two years but is expected to rebound by 37% in 2022.