Key points:
- Mastercard stock dropped 2% despite positive earnings
- An increase in consumer spending, particularly travel, is returning to pre-pandemic levels
- In a big week for payment providers, Mastercard's earnings appear diminished next to American Express's $12.1B revenue, sending stock surging 9%
This is a big week for investors who are looking at payment providers; with American Express, Mastercard, and Visa all reporting earnings. During the height of the pandemic, payment providers felt the tightening of the economic landscape through a wavering of consumer spending – however, with American Express posting strong results yesterday, and Mastercard beating estimates today – it seems that consumer spending is starting to bounce back.
Mastercard’s (NYSE: MA) Q4 net income rose to $2.38B from $1.79B, or $2.41 per share from $1.78. Adjusted, Mastercard earned $2.35 per share compared to $1.64 the previous year; beating consensus at $2.21. The company reported a revenue of $5.22B, showing a $4.12B increase year-on-year, beating a general estimate of $5.17B.
On another note, the company saw cross-border volume rising 53%, with cross-border spending back to pre-pandemic levels; a great sign for the payment provider that traditional spending habits are returning.Â
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However, looking at Mastercard stock; investors remained apprehensive, despite the news on cross-border spending returning to pre-pandemic levels on the return of the travel buzz. Inflationary woes might be playing a part in the absence of bulls this morning, perhaps concerned about levels of domestic spending moving forward; pushing MA stock down roughly 2% in early trading.
Looking over to American Express (NYSE: AXP), it seems to be a similar narrative, yet there are a few stand-out financials that investors might want to pay attention to. Most importantly, the company has chosen to serve a specific market segment, and it seems to be working incredibly well.
American Express posted revenue of $12.1B at a quarterly increase of 30%, more than double the revenue of Mastercard for a smaller market slice. The market reacted positively, with the stock surging around 9%. It seems that AMEX’s strategy is infallible at the moment; and strategy-wise, the company seems like a more valuable investment.
