V - Visa

[Liberty]

https://www.bloomberg.com/press-releases/2021-01-12/visa-and-plaid-announce-mutual-termination-of-merger-agreement

 

"Visa and Plaid Announce Mutual Termination of Merger Agreement"

[LC]

Too bad, that would have been very good for Visa IMHO.

[fareastwarriors]

Too bad, that would have been very good for Visa IMHO.

 

I would agree.

 

As for Plaid, it now can get a much higher valuation in the public market than $5.3 billion.

[bizaro86]

Too bad, that would have been very good for Visa IMHO.

 

I would agree.

 

As for Plaid, it now can get a much higher valuation in the public market than $5.3 billion.

 

Yeah. That sounds a lot like, "plaid told us a SPAC offered them a $12 B pre-money valuation and wanted us to match or they'd quit fighting the suit and we told them to forget it"

[MattR]

Too bad, that would have been very good for Visa IMHO.

 

I would agree.

 

As for Plaid, it now can get a much higher valuation in the public market than $5.3 billion.

Could be Ackman with the SPAC or some of the bigger finance SPACs

[fareastwarriors]

During the three months ended December 31, 2020, Visa repurchased 8.7 million shares of class A common stock at an average price of $202.30 per share for $1.8 billion.

 

As of January 1, 2021, Visa had $3.6 billion available for share repurchase and on January 26, 2021, the board of directors authorized an additional $8.0 billion class A common stock share repurchase program

 

 

https://s1.q4cdn.com/050606653/files/doc_financials/2021/q1/Visa-Inc.-Q1-2021-Financial-Results.pdf

[Spekulatius]

During the three months ended December 31, 2020, Visa repurchased 8.7 million shares of class A common stock at an average price of $202.30 per share for $1.8 billion.

 

As of January 1, 2021, Visa had $3.6 billion available for share repurchase and on January 26, 2021, the board of directors authorized an additional $8.0 billion class A common stock share repurchase program

 

 

https://s1.q4cdn.com/050606653/files/doc_financials/2021/q1/Visa-Inc.-Q1-2021-Financial-Results.pdf

 

Sounds like a huge number but really won’t make a dent with a ~$450B market cap. They trade around ~36x 2021 earnings estimates. MA and V are surprisingly hard hit by the lack of travel and cross border transactions which are highly profitable. Full recovery will take until 2022.

[Liberty]

https://www.wsj.com/articles/justice-department-investigating-visa-over-debit-card-practices-11616164525

 

Stock down 4.65%

[wabuffo]

VISA makes a lot more in debit card interchange fees than on credit card interchange fees - particularly if they involve smaller banks (which is where many of the fintechs play).

 

Congress created this mess and then they are shocked when everyone does regulatory arbitrage.

 

wabuffo

[Casey]

During the three months ended December 31, 2020, Visa repurchased 8.7 million shares of class A common stock at an average price of $202.30 per share for $1.8 billion.

 

As of January 1, 2021, Visa had $3.6 billion available for share repurchase and on January 26, 2021, the board of directors authorized an additional $8.0 billion class A common stock share repurchase program

 

 

https://s1.q4cdn.com/050606653/files/doc_financials/2021/q1/Visa-Inc.-Q1-2021-Financial-Results.pdf

 

Sounds like a huge number but really won’t make a dent with a ~$450B market cap. They trade around ~36x 2021 earnings estimates. MA and V are surprisingly hard hit by the lack of travel and cross border transactions which are highly profitable. Full recovery will take until 2022.

 

I like the share buybacks, perceived/real regulatory risk, great business combo here.

[gjangal]

I am a big fan of the business duopoly ( who is not?) and own both MA and V. There has been quite a bit of run up in these names for the last few years. They may bounce at these levels for a couple more years before growth/ capital return makes them look cheap again

[fareastwarriors]

On 1/12/2021 at 5:04 PM, bizaro86 said:

 

Yeah. That sounds a lot like, "plaid told us a SPAC offered them a $12 B pre-money valuation and wanted us to match or they'd quit fighting the suit and we told them to forget it"

 

Plaid Is Said Close to Financing at About $13 Billion Valuation

https://www.bloomberg.com/news/articles/2021-04-02/plaid-is-said-close-to-financing-at-about-13-billion-valuation?srnd=premium

Visa should've bought some private shares after the deal fell through. 

Edited April 2, 2021 by fareastwarriors

[Krapdivad]

https://podcasts.apple.com/us/podcast/business-breakdowns/id1559120677?i=1000520232597

 

An excellent podcast where they breakdown how Visa works, and its moat. 

 

I remember Chuck Akre saying that he’s stopped talking about Visa’s competitive advantages  because he thought they weren’t well recognized by the market. 

 

Most people don’t know how Visa works because Visa primarily works with banks. 

 

When a Visa transaction is made, the merchants bank (acquiring bank) receives money from a  customers bank (the issuing bank) through Visa’s network. 

 

Visa is incentivized to offer issuing banks (who give out credit cards) larger interchange fees (a larger percentage of each transaction). 

 

With larger interchange fees, banks are then able to then offer larger rewards to their customers. This incentivizes the credit card user to use that credit card more, and draws in new customers. 

 

This reminded me of Nomad Partnership’s recognition of the scale economies shared model. 

 

By passing the savings onto the customer, it incentivized the customer to keep coming back and also drew in new customers. They would use this larger base to continue to lower merchant costs to produce savings and the cycle would continue. 

 

There are many other great insights into Visa’s long term success in this podcast.