Visa, Mastercard the next USD 1 trillion companies?

Soaring stock prices are propelling credit and debit card companies Visa Inc and Mastercard Inc up the market value charts, where they currently rank 7th and 11th among companies in the benchmark S&P 500 index. The stock prices of both Visa and Mastercard have gained roughly 50 per cent in the past year.

While the stocks may not keep up that torrid pace, Visa and Mastercard would each be worth over $1 trillion by 2023 if their average annual gains of the past three years were to continue, surging past the likes of Facebook Inc and Berkshire Hathaway Inc, if they also maintain their recent pace.

Fuelling their rise is a shift toward cashless financial transactions spurred by a rise in online shopping.

“Everything travels on their rails,” said Sandy Villere, portfolio manager of the Villere Balanced Fund, which holds Visa shares. “They literally sit in the middle of the banks, consumers and merchants and that has been a really enviable place to be.”

Visa had a market value of $449 billion and Mastercard’s stood at about $324 billion as of Thursday’s close. The $1 trillion club currently includes Apple Inc, Microsoft and Google-parent Alphabet. Amazon.com stood at $927 billion, though the e-commerce leader’s shares jumped on the heels of its earnings report on Thursday after the bell, putting it in position to crack $1 trillion, as it did briefly in September 2018.

Revenue for both Visa and Mastercard nearly doubled over their past five fiscal years, to nearly $23 billion for Visa, and about $17 billion for Mastercard, according to Refinitiv data. Adjusted earnings per share more than doubled for the companies in that period.