Stock Entry Point Article

Mastercard

Mastercard Incorporated reported its Q22020 earnings on 30 July 2020. The fall in consumer spending as a result of the pandemic did not stop the company from reporting consensus estimate-beating results. Net income went down by 31% on a Y-o-Y basis to $1.4 billion. Revenue for the quarter was $3.3 billion – a 19% drop on a Y-o-Y basis. Earnings were about 18% higher while revenue was around 2% higher than consensus estimates.

Due to the pandemic, gross dollar volume of purchases using Mastercard credit card saw a 10% fall to $1.4 trillion. Cross border volume also saw a 45% decline. Lastly, switched transactions fell 10%. Two segments of Mastercard, namely cyber & intelligence as well as data & services solutions saw revenue growth of 10%.

Lower marketing spending and advertising outlay resulted in 5% lower operational expenses. Interestingly, Mastercard paid $401 million in dividends during the quarter. The company also restarted its share buyback program.

According to Ajay Banga, CEO, Mastercard, “Our services growth remains strong. It’s outpacing the core, and it drives meaningful differentiation and diversification. Our digital and multi-rail solutions are enabling us to address key opportunities by providing customer choice and the capabilities required to capture a wide range of payment flows. And we continue to win deals across all our core products. So we are focused on what we can control. We are focused on executing against our strategy.”

Recently, on June 23rd, Mastercard had revealed a deal to acquire fintech company Finicity for $825 million. This move was seen by many as a response to Visa buying Plaid earlier in 2020. Mastercard stock closed at $308.53 on 31st July 2020, up 2.02% for the past month.

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