For the fourth day in a row, shares of credit card giant Visa (V -1.13%) continued to decline on Monday, hitting a 3% loss as of 1:20 p.m. ET.
You can blame Mizuho Securities for that.
On Friday, you see, the Japanese banker downgraded shares of Visa stock from buy to neutral, and slashed its price target on Visa 14% to $220 a share, according to TipRanks.com.
What's changed to turn Mizuho from optimistic to pessimistic on Visa?
Mizuho explained that "the cash-to-card conversion runway, which has driven ~45% of Visa's revenue growth and has historically been the single most important driver of revenue growth," has "likely permanently" been "shortened" by the pandemic and consumers' switch from using cash to using cards to make their purchases.
But wait! What exactly is this "cash-to-card conversion runway" that Mizuho speaks of?
As it turns out, Mizuho never quite gets around to defining the phrase in its note. But from the context, it appears the analyst's worry boils down to this: Over the past several years, consumers have generally been paying for things with cash less often, and paying for things with cards more often. That's the "cash-to-card conversion," and on balance, it's been a good thing for Visa, adding to the company's revenue growth in years past.
During the pandemic, this trend got even better for Visa, as consumers eschewed cash in favor of plastic -- and indeed, were essentially forced to use credit and debit cards when quarantined and shopping from home. The problem is, this accelerated "cash-to-card conversion" pulled some of Visa's expected future revenue growth into 2020 and 2021, with the result that there's now less cash to convert to credit in the future.
Long story short, that's why Mizuho is now more conservative about Visa's prospects today: It thinks the company used up a lot of its growth potential during the pandemic, and now has a smaller runway along which to grow in 2022. Incidentally, it's also why investors are selling Visa stock today.