Mastercard, Visa Stock Plunge Over 6%
With the stablecoin bill about to pass, market rumors suggest that giants like Walmart, Amazon, and Expedia Group are considering issuing their own stablecoins to bypass credit card issuers like Visa and Mastercard, causing a sharp drop in Mastercard and Visa on Friday. However, several analysts point out that stablecoins are currently not very suitable for commercial activities between enterprises and consumers, and Mastercard and Visa have been actively integrating stablecoin functionalities, reaffirming their outperform rating in the market. Now is a good time to buy on dips!
According to reports from The Wall Street Journal, Walmart and Amazon are reportedly discussing issuing their own stablecoins in the United States, putting pressure on the industry. In addition to large retailers, other multinational giants such as airlines and Expedia Group are also considering issuing their own cryptocurrencies to bypass credit card issuers like Visa and Mastercard. Stablecoins are typically pegged to currencies like the US dollar, making these tokens usable for payments.
Visa shares fell more than 6%, while Mastercard plummeted over 7.1% on Friday, marking the biggest single-day drop for both companies in about two months. Shares of payment companies like American Express Co. and PayPal Holdings Inc. also traded lower during the session.
Despite the news causing Visa and Mastercard to lose over $60 billion in market value, analysts believe it’s a good time to buy low on stocks of these two companies.
Analysts: Good Time to Buy Mastercard, Visa on Dips
According to Bloomberg, William Blair analyst Andrew Jeffrey wrote in a report, “We encourage investors to buy their stocks when Visa and Mastercard are weak and reiterate our outperform rating on these two companies.” He believes that consumers are accustomed to using credit and debit cards, and these habits are unlikely to change quickly. While merchants see stablecoins as a potential way to reduce credit card costs, stablecoins are still not very suitable for commercial activities between enterprises and consumers.
Mastercard, Visa Actively Integrating Stablecoin Functionalities
Diksha Gera from Bloomberg Industry Research stated that the Friday stock price drop reflects concerns about stablecoins eroding transaction volume and profit margins, but it’s too early to worry. Visa and Mastercard are already actively integrating stablecoin functionalities, but persistent trust and regulatory barriers, as well as the longer adoption curve for consumers, could hinder widespread adoption.
BMO Capital Markets analyst Rufus Hone also agrees that the widespread use of stablecoins in consumer payments is unlikely, but even if stablecoins are adopted, Visa and Mastercard will benefit. Hone wrote in a report, “They are not waiting to be disrupted – both companies already have the capability to handle and settle consumer payments on the stablecoin track, and we believe they will be able to achieve transaction monetization in the stablecoin environment and maintain their outperform rating on these two companies.”
Risk Warning
Cryptocurrency investments are highly risky, with prices fluctuating sharply, and you may lose your entire capital. Please assess the risks carefully.