Visa Q1 - Crossborder Payments Recover

On Friday, Visa released quarterly results, and the stock surged 10% on the news. The market's reaction says a thousand words. Revenues grew 24%, while net income grew 27% to $4 billion. The growth was thanks to payment volumes increasing 20% and their high margin cross border volume increasing 40%. Travel is coming back.

The Visa share price paints an interesting picture. The stock reached $200 in January 2020. Then Covid hit and it fell with the best of them. But the recovery was quick and by August 2020 the share had surpassed its pre-covid highs.

Soon the market realised how reliant Visa was on cross border transactions, the share price dropped from $246 in July 2021 to $193 in November, as variant after variant ruined holidays around the world. Even despite the large shift towards electronic transactions, Visa missed its high margin cross border swipes.

Now travel is back and most of the shift from cash to card has remained. Visa still finds itself as the back-end service provider for many fintech innovations. Most of the payment applications like PayPal and Apple Pay still use Visa and Mastercard to do the switching.

We think Visa is perfectly poised to benefit from a resurgence in travel while still enjoying the tailwinds of a future without cash. At these levels ($225 a share) we rate Visa a strong buy.