Shares of Visa (V +0.61%) dropped by 7% on June 14 after The Wall Street Journal reported that retail giants Walmart and Amazon are exploring the launch of their own stablecoins. The development raises serious questions about the future of traditional payment networks, especially as retailers become increasingly frustrated with the fees associated with them.
Let's examine Visa's stance on stablecoins, its recent earnings, and valuation to determine whether its stock is a buy, sell, or hold.
NYSE: V
Key Data Points
What are stablecoins, and why are they growing in popularity?
Stablecoins are digital tokens designed to maintain a steady value by being pegged to traditional currencies, such as the U.S. dollar. Backed by reserves of cash or cash-equivalent assets such as Treasury securities, they are primarily used to hold value or facilitate transactions within the broader cryptocurrency ecosystem.
For retailers like Amazon and Walmart, the idea is that stablecoins could reduce settlement delays, eliminate interchange fees, and ultimately become less dependent on payment processors such as Visa and its closest competitor, Mastercard.
Visa's management isn't blind to the shifting landscape. The company offers a seven-day-a-week stablecoin settlement, having recently surpassed $200 million in cumulative stablecoin volume. Visa CEO Ryan McInerney described the nascent, but fast-growing opportunity:
It's still early, but we do see real potential, which is why we've been investing in the crypto space broadly in the stablecoin space specifically for many years now. We've built up a team of real experts that I think are very well respected among the ecosystem, but it's early. On the one hand, $200 million is a great kind of milestone. On the other hand, it's still a relatively, a very small portion of our overall settlement volume.
Additionally, Visa is actively exploring programmable finance through initiatives like its Tokenized Asset Platform, which aims to help banks securely issue and manage stablecoins. One of its early partners, BBVA Argentina, plans to roll out the pilot stablecoin project with Visa sometime in 2025.
While it remains unclear whether stablecoins will achieve widespread adoption, Visa is taking steps to ensure it maintains a central role if they do. Meanwhile, lawmakers in Congress are working on a regulatory framework that would set clear rules for stablecoins, including pathways for private companies to issue them under federal oversight.
Image source: Getty Images.
Stablecoins haven't hurt Visa's earnings yet, but legal challenges have
Despite the potential risk that stablecoins may pose to Visa's core business, its operations remain resilient. In its fiscal Q2 2025 earnings report, Visa posted 9% revenue growth, generating $9.6 billion. Looking at its bottom line, the company generated $4.6 billion in net income, a 2% year-over-year decline, primarily due to a $992 million litigation provision associated with an ongoing multibillion-dollar lawsuit over its interchange fees. When adjusting for that expense and other special items, Visa would have generated $5.4 billion in net income, a 6% year-over-year increase.
While slower earnings growth and ongoing legal challenges may disappoint some, Visa's fundamentals remain intact, enabling management to return a substantial amount of capital to shareholders through dividends and share repurchases. Aided by $7 billion in net cash on its balance sheet, Visa's board of directors recently increased the company's dividend for the 16th consecutive year. Today, the company pays a quarterly dividend of $0.59 per share, which equates to an annual yield of 2.3%. With a payout ratio -- the percentage of earnings a company pays out in dividends -- at only 22.3%, investors can reasonably expect annual dividend increases in subsequent years.
As for Visa's share repurchases, over the past three years, the company has reduced its share count by 9.2%. And in the most recent quarter, Visa's management spent $4.5 billion (nearly all of its net income) on buying back its stock. Building on that momentum, the board of directors approved a new $30 billion buyback program, reinforcing the company's commitment to boosting shareholder value through continued reduction in outstanding shares.
V Shares Outstanding data by YCharts
Is Visa a buy, sell, or hold?
Visa's dominant position in global payments isn't easily threatened. Its massive network, regulatory know-how, and deep ties with banks give it a powerful moat. Even if stablecoins gain traction, Visa has the resources and partnerships to play a central role in how they're issued, transacted, and regulated.
Still, the stock isn't cheap. With shares trading at 36 times earnings -- their richest multiple in three years -- much of the bullish outlook may already be priced into the stock.
V PE Ratio data by YCharts
The bottom line? Visa remains one of the most established players in the global payments industry, and its proactive investments in stablecoins suggest it won't be left behind. However, given valuation concerns, investors may want to continue holding on to their Visa stock rather than buying it at its current price.
