Visa Incorporation is a company based in the United States. The company operates a payment platform and financial technology company. The company designs payment credit and debit cards as well as the software and hardware needed to use these cards. These payment methods can be accepted by merchants around the world. The VisaNet allows these transactions to be processed. The company was founded in 1958.
Why You Should?
- Visa is a great reopening play in an investor’s portfolio. The COVID-19 pandemic has decimated the demand for payment method processing because consumers stayed at home and spend less money around the world. This has caused an extremely short to mid-term impact to the company. However, once the pandemic comes to an end, the company will return to growth,
- Visa is the largest payment provider in the world. It beats out companies like Mastercard and American Express. Because of its large market share, the company can find better growth opportunities. For example, if a company wants to issue a card, it can partner with Visa because if its wide rate of acceptance around the world. This will benefit the company and its investors in the future.
- Visa is still entering new markets around the world. As these developing markets receive Visa-branded cards, as well as other Visa-branded payment processing products, the company will continue to see rising volumes. This will benefit the company and its investors in the future.
- Visa continues to sign new partnerships with companies like Wells Fargo and other large card issuers around the world despite the impacts of the pandemic. These partnerships will raise the number of payment volumes that the company sees every quarter. This will cause revenues and profits to rise, which will benefit the company and its investors.
- Visa has seen rising revenues and profits over the past couple of financial years. Though the company reported a drop in revenues and profits during the financial year of 2020, the company looks to return to a strong growth environment after this pandemic is over. These rising metrics will help the company grow and will also benefit investors in the company. In the financial year of 2019, the company reported revenues of around 22.98 billion and profits of around 12.08 billion. Both of these metrics are higher than what the company reported in the financial year of 2018 when they had revenues of around 20.61 billion and profits of around 10.3 billion. However, in the financial year of 2020, the company reported revenues of around 21.85 billion and profits of around 10.87 billion, both of which were lower than what the company reported in the financial year of 2019. This occurred due to the impacts of the COVID-19 pandemic.
Why You Should Not?
- Visa continues to face competition from many large payment processing and financial technology companies. Some of these competitors include PayPal, Mastercard, American Express, and many others. This competition might hurt the company and its investors in the future.
- Visa has been negatively impacted due to the impacts of the COVID-19 pandemic. As people stayed at home and reduced spending on travel and other similar expenses, VIsa reported a drop in payment volumes in some markets. This has hurt the company and its investors in the short term. However, the company looks for these impacts to end this year.
I think that Visa is a great long-term investment due to its position as a good reopening play, its position as the largest payment provider and processor in the world, emerging markets, new partnerships, and rising revenues and profits. However, tough competition and impacts from the pandemic might hurt the company and its investors in the future.