Visa: The Valuation Conundrum In A Frothy Market

Visa Inc. (NYSE:V) continues to deliver phenomenal shareholder returns year after year, and thus far 2018 is no exception. Over the past year, Visa has appreciated 45% and currently sits at a 52-week high. Visa has become a top-performing perineal large-cap growth stock that continues to deliver despite emerging threats in the digital payments space, blockchain technology and maturing markets in the traditional payments space leading to slower growth prospects. I’ve been reluctant to get behind the stock of Visa considering its valuation, slowing growth and trends away from the traditional credit card space among the younger demographics that embrace PayPal (PYPL) and PayPal’s Venmo for payment options and exchanging payments between multiple parties.

Furthermore, Amazon (AMZN) may be disrupting the credit card transaction space with its potential launch of Amazon financial services and Amazon Pay. Despite Visa’s massive move over the past year, growth has become worrisome and touched down to single digits before bouncing back to double digits over the last two quarters. I feel that shareholders have become overly enthusiastic about Visa’s growth prospects. The stock has appreciated over 45% during the past year, boasts a P/E of over 35 and a PEG of over 2.0 in the midst of a frothy market. This scenario doesn’t provide a great benefit-reward profile at these levels in my opinion. Continue reading "Visa: The Valuation Conundrum In A Frothy Market"

Visa - Heed Slowing Growth and Lofty Valuation

Noah Kiedrowski - Contributor - Biotech - Visa

Heed Slowing Growth

Visa Inc. (NYSE:V) shareholders have witnessed a meteoric rise in share price since the post-Visa Europe integration which provided a double-digit annualized one-time boost to revenue growth and thus was being used as an incorrect growth comparator. Additionally, since Donald Trump was elected president, the vast majority of stocks have seen significant gains, and Visa is no exception, moving from $78 per share in December of 2016 to $126 in January of 2018 or a 60% appreciation. Now that Visa Europe has been fully reflected in its numbers, the double-digit revenue growth ceases to exist, and its lofty valuation is unjustified. Visa’s management has now forecasted revenue growth in the high single-digits for the foreseeable future with EPS growth in the mid-teens, artificially high due to share buybacks. With revenue growth rates slowing to single digits coupled with the past year appreciation and the stock boasting a P/E in excess of 40, I feel that further appreciation is unjustified and entering a position at these heightened levels is not prudent. Furthermore, Visa faces a rapidly changing landscape in the payments and peer-to-peer space with the likes of Pay Pal (PYPL), Square (SQ), Amazon (AMZN) and an emerging platform for bank transfers with Zelle. Blockchain technology also continues to gain ground in a variety of industries, and I feel that it will inevitably enter into the credit card transactions space. Continue reading "Visa - Heed Slowing Growth and Lofty Valuation"

Square Just Made It A Lot Easier To Own Bitcoin

Matt Thalman - Contributor - ETFs

A few weeks ago, Square’s Cash Application began allowing users to buy, sell, and hold the crypto-currency Bitcoin. Square’s Cash App, which is generally used to transfer money, has now unofficially endorsed the crypto-currency with what is essentially a trial offering to a limited number of Cash App customers. It should be noted that Square has allowed customers to use Bitcoin as a form of payment for nearly two years now, but customers needed to purchase their Bitcoin’s through other methods in the past.

In a statement, a Square spokesperson said, “We’re always listening to our customers, and we’ve found that they are interested in using the Cash App to buy Bitcoin. We’re exploring how Square can make this experience faster and easier, and have rolled out this feature to a small number of Cash App customers. We believe cryptocurrency can greatly impact the ability of individuals to participate in the global financial system and we’re excited to learn more here.”

Square’s Chief Executive Officer Jack Dorsey is a believer in crypto-currencies and the blockchain technology they are built on. He recently told an interviewer that blockchain is “the next big unlock.” The interview went further, and Dorsey disclosed that friends and family had asked him how they could buy Bitcoin, which may be an insight into why he has moved Square in its current direction. Continue reading "Square Just Made It A Lot Easier To Own Bitcoin"