Visa (V 1.75%) is one of the largest companies on Earth. It carries a massive market capitalization of $660 billion, and its role in the economy can't be overstated.
The company helps support the safe, secure, and convenient movement of money between various parties across the globe. Just last quarter (Q3 2025, ended June 30), Visa handled a whopping $4.2 trillion in payment volume, showcasing its impressive scale.
Shares have fallen 8% off their all-time high (as of Aug. 18). Investors might be thinking about buying the dip, but before making a move, here are three must-know facts you can't ignore when it comes to this top financial stock.
Image source: Visa.
1. Visa's growth drivers
In the past decade, Visa's revenue has increased at a compound annual growth rate of 11.3%. According to Wall Street analyst expectations, the top line will grow at a yearly clip of 10.5% between 2024 and 2027. Looking beyond that forecast period, I wouldn't be surprised if the business continues the same level of gains for many years.
Visa is positioned to benefit from some long-lasting trends. The first is the rising penetration of digital and cashless transactions. The U.S. might be a developed economy, but 52% of Americans will go completely cashless in 2025, according to Capital One Shopping Research. There's still so much room for card payments to proliferate, which means the opportunity in less developed emerging markets is much bigger.
Another growth driver is general economic expansion. As countries increase their gross domestic product (GDP), consumers and businesses will spend more money. This activity helps Visa handle more payment volume, which leads to greater revenue.
During the latest fiscal quarter, Visa raked in $2.8 billion (or 27%) in revenue from add-on services, like risk and identify solutions and advisory services. What's more, the business is pressing the gas pedal on innovation, working on things within artificial intelligence (AI) and stablecoins. There could be growth potential in these areas.
2. Visa's formidable competitive position
At a high level, Visa connects merchants, consumers, and financial institutions to help facilitate the flow of money. Consequently, the company has developed an extremely powerful network effect. This underpins its competitive position.
There are 4.8 billion Visa cards in use out in the world. On the other side, there are more than 150 million merchant locations that accept them as a form of payment. So many people have Visa cards because so many merchants accept them, with the opposite also being true. It's a system that gets stronger as it grows, and it's very difficult for anyone to disrupt.
A potential challenger would need to build the underlying technical infrastructure, while also convincing banks to lend with its credit cards. This is an impossible task because there aren't any merchants that use this new entrant's system yet. The problem arises from trying to bring on stakeholders when there's no value being offered.
3. Is the stock cheap?
Most would agree that Visa is a great company. Its durable growth, network effect, and incredible profitability (with a Q3 net profit margin of 52%) resemble a business that investors should want in their portfolios.
However, investing in the company right now might not provide a clear margin of safety. As of Aug. 18, the stock traded at a price-to-earnings (P/E) ratio of 33.5. On the one hand, that metric is below the five-year trailing average. But on the other hand, Visa shares have underperformed the S&P 500 since August 2020. The best decision, in my view, is probably to wait for a pullback.
There might still be investors who are interested in owning this business, regardless of the valuation. Maybe a dollar-cost averaging strategy makes sense. But you're now familiar with Visa's growth drivers, its network effect, and the stock's valuation. Knowing this info will support a better decision-making process.
