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V Q2 - Cross-Border Payments Down

Another Vestact stock to report last week was Visa; they were reporting for Q2 of their 2020 financial year. Revenue for the quarter came in at $5.9 billion and earnings per share of $1.39, both beating the expectation of the street.

Looking at Visa's numbers, we get a clear idea of how people have changed their behaviour over the last month. As expected, cross-border spending has collapsed but online spending has surged. There has also been a shift to more contactless payments; tap and go because no-one wants to risk touching a keypad. In overall transaction volumes, Visa saw a drop of 30% at the end of March. As we moved through April, the number improved. At the end of April, volumes were only down 19%. As more nations emerge from lockdown, this number will continue to improve.

Due to all of the uncertainty around, the Visa management decided not to issue guidance for the rest of the year. The share price is 22% away from the highs reached in February, reflecting the lower profits that they will make in 2020. As life returns to normal, so will Visa's profits. A tailwind will come from societies being less willing to use cash due to the risk of touching something that others have handled. The stock is a core part of Vestact portfolios and we continue to buy it.


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