Mastercard falls shy of Wall Street estimates in the fiscal third quarter

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in… read more.
on Oct 28, 2020
  • Mastercard falls shy of Wall Street estimates in the fiscal third quarter.
  • The financial services firm reports £2.95 billion of revenue in Q3.
  • Mastercard earns £1.23 per share on an adjusted basis in the third quarter.

Mastercard Inc. (NYSE: MA) reported its financial results for the fiscal third quarter on Wednesday that came in weaker than what analysts had anticipated. The company attributed the decline to the Coronavirus pandemic that continued to weigh on travel spending in Q3. COVID-19 has so far infected more than 44 million people worldwide and caused over 1.17 million deaths.

Shares of the company were reported about 5% down in premarket trading on Wednesday and lost another 2.5% on market open. Including the price action, Mastercard is now exchanging hands at £228.55 per share. In comparison, the stock had plummeted to as low as £157 per share in March, when the impact of COVID-19 was at its peak.

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Mastercard had started the year at a per-share price of £234. Trading stocks online is easier than you think. Here’s how you can buy shares online in 2020.

Mastercard’s Q3 financial results versus analysts’ estimates

Mastercard said that its net income in the third quarter came in at £1.15 billion that translates to £1.16 per share. In comparison, it had reported a higher £1.62 billion of net income in the same quarter last year or £1.59 per share. Earlier in October, Mastercard and its peer, Visa Inc., were accused of charging excessive fees.

On an adjusted basis, the financial services corporation earned £1.23 per share in Q3 versus the year-ago figure of £1.65 per share. FactSet Consensus for Mastercard’s per-share earnings in the third quarter stood at a higher £1.27 per share.

In terms of revenue, the American multinational posted a decline from £3.17 billion last year to £2.95 billion in the recent quarter. Experts had forecast a higher £3.05 billion of revenue for Mastercard in the fiscal third quarter.

CEO Ajay Banga’s comments on Wednesday

Gross dollar volume, the Purchase-based company highlighted on Wednesday, climbed 1% in Q3. Cross-border volume, on the other hand, slid about 36%. According to CEO Ajay Banga:

“We are seeing encouraging progress in the trajectory of domestic spending, while travel spending remains a challenge.”

In an announcement last month, Mastercard revealed to have rolled out a testing platform for CBDC.

Mastercard performed fairly upbeat in the stock market last year with an annual gain of close to 60%. At the time of writing, the American multinational financial services corporation has a market cap of £229 billion and has a price to earnings ratio of 41.14.

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