MASTERCARD stock: slow but sure

MASTERCARD stock: slow but sure

2020-02-25 • Updated

Payment processing vs flying to Mars

Have a look at MasterCard and Tesla share price performance. Both show the same period of observation – the last 7 years, since 2013. Now, Tesla made the rise from approximately $50 to almost $1000 during these years, while MasterCard rose from the same $50 to “only” $350. How good is each one?

3.png

Pick your cherry

“How good” comes down to what you need in your trade. If you have no problem admitting that the flip side of a 200% gain in 2 years is a risk to get halved in two days – meaning, you are an “honest” risk-taker – then Tesla may be good for you. Its vulnerability is its advantage – fundamental unpredictability. It’s fundamental because Tesla as an enterprise has not been fully successful in a business sense of the word, until now. It still functions largely on long-term liabilities, most of which come due in 4 years. And Tesla’s Model-3 purchase orders do not yet answer this question.

Even with the strategic horizon for electric cars as a global industry, Tesla still has the full potential to be wrecked at any time. Alternatively, it may rise to $2000, who knows. As Warren Buffet likes to say, if the knowledge of the past always led to wealth, Fortune-500 would consist of librarians. 

Otherwise, if you prefer seeing your tree grow an extra apple every day, with no rush and no hustle, then MasterCard would be more interesting. Stability over risk, as usual. A clear advantage here – undeniable predictability. Recessions, wars, Coronavirus – whatever happens, the number of people will grow, the amount of money will grow, and the number of financial transactions will grow. Based on that, MasterCard is doomed to expand. The story becomes more interesting in view of the following facts.

A drop of venom

Coronavirus causes damage. This damage made MasterCard to reduce its projections for the Q1-2020 revenue. Now, it expects its revenue to grow by just 9-10% in the first quarter, while before it was expecting to have 11-12%, similar to Q1-2019. Overall, the company expects the yearly revenue growth to stay at the lower border of the forecast. That is an alerting obstacle indeed. However, there would be no fight without a greater reward.

A big cake

In the middle of February, an interesting announcement appeared in the media: MasterCard has finally obtained approval from the Chinese authorities to establish its bank card clearing in China. That means, $27trln-worth market opens its doors to the payment processing company. It’s too early to celebrate, however. First, AmEx is already there, having its formal approval since 2018. Second, local Chinese payment processing companies have long been servicing customers across the country, and they are already accustomed to paying by WeChat, etc. So yes, the path is clear, but no, it will not be an easy walk. MasterCard will have to struggle with no guarantee of success. But which is easier: fly to Mars or enter China? We will see.

Similar

Latest news

European Currencies Ahead of the Banks' Statements
European Currencies Ahead of the Banks' Statements

On Thursday, the 2nd of February, the Bank of England will publish its report concerning interest rates and inflation data for the Eurozone. Professionals and investors anticipate that Andrew Bailey’s lead team of policy makers will likely raise interest rates to 4%; the highest in over a decade, for the tenth time in a row.

Will the FOMC Surprise the Markets?
Will the FOMC Surprise the Markets?

The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates?

What awaits the Oil Market in February?
What awaits the Oil Market in February?

Western countries are trying to find other options for oil and gas supplies after a 10th package of sanctions, which will put more pressure on Russian oil and decrease global oil supply. Italy, for example, is in talks with Libya.

Deposit with your local payment systems

Feel the Team Spirit

Data collection notice

FBS maintains a record of your data to run this website. By pressing the “Accept” button, you agree to our Privacy policy.

Callback

A manager will call you shortly.

Change number

Your request is accepted.

A manager will call you shortly.

Next callback request for this phone number
will be available in

If you have an urgent issue please contact us via
Live chat

Internal error. Please try again later

Don’t waste your time – keep track of how NFP affects the US dollar and profit!

Beginner Forex book

Beginner Forex book will guide you through the world of trading.

Beginner Forex book

The most important things to start trading
Enter your e-mail, and we will send you a free Beginner Forex book

Thank you!

We've emailed a special link to your e-mail.
Click the link to confirm your address and get Beginner Forex book for free.

You are using an older version of your browser.

Update it to the latest version or try another one for a safer, more comfortable and productive trading experience.

Safari Chrome Firefox Opera