- Payments volume fell 4% in the US, while cross-border volume plunged 19%
- The company notes sharp declines in volume and transaction trends in the second half of March
- Stock price plunges 5% following a strong rebound from the lows
Visa (NYSE:V) stock price closed 5% lower yesterday after the payments giant reported a decline in payments volume amid the global economic slowdown.
Fundamental analysis: Discouraging data
In a regulatory filing to the U.S Security and Exchange Commission (SEC), Visa announced a sharp decline in payments volume. In March, payments volume fell 4% in the U.S. compared to a year ago, while cross-border volumes on a constant-dollar basis plunged 19%, and 23% when excluding transactions within Europe.
“As the virus has spread in the last few weeks, the impacts we saw in Asia in February are now occurring in the rest of the world, with a rapid deterioration of cross-border travel related spending, both card present and card not present,” the company said in the filling.
“As countries have imposed social distancing, shelter-in-place or total lock-down orders, domestic spending, most notably in travel, restaurants, entertainment and fuel, has sharply declined week on week with a meaningful deterioration in volume and transaction trends in the second half of March”.
Compared to the end of Q1, payments volume is up 5% in the United States, cross-border figures are flat while processed transactions rose 9% on a year-to-year basis. The company has also updated its guidance for Q1 (its fiscal Q2).
“On a non-GAAP and constant dollar basis, excluding acquisitions, Visa expects net revenue growth in the high end of mid-single digits, operating expense growth in the low end of high single digits and earnings per share growth in the high end of mid-single digits.”
In the meantime, Oppenheimer analyst Glenn Greene lowered the company’s price target to $175 from $210, while the “Outperform” hasn’t been changed. Stephens also downgraded the price target from $228 to $192.
Technical analysis: Stock losing momentum
Visa stock is one of the best-performing stocks recently. Compared to other companies that are hitting multi-decade lows, Visa’s 2020 low corresponds to levels seen in January last year. The stock belongs to the group of companies that saw its shares hit record highs in February, days before the COVID-19 worldwide outbreak.
Following the initial selloff, the stock price managed to gain around 10% last week, rebounding from the 1-year low. As seen in the chart, the price action stopped at the descending trend line. In the last two days, shares of Visa have lost around 8%.
The stock price is now fighting to close above the 100-WMA near the $160 handle. For the bears, the main target is the 200-WMA, which trades just below the $130 mark and offers a solid buying opportunity for investors looking to buy Visa stock.
Shares of Visa plunged 5% after the company reported a decrease in monthly payments volume, on the back of the lower business activity. As a result, two rating agencies downgraded the price target to below $200.