Visa stock price sinks as $5.3 billion acquisition of Plaid is off

Shares of Visa (NYSE: V) are trading over 6% lower this week after the payment-processing company said it is giving up on plans to acquire financial services company Plaid amid regulatory hurdles. 

Fundamental analysis: Visa loses patience 

Beginning of the last year, Visa announced it is acquiring Plaid for $5.3 billion. However, the acquisition plans hit a major stumbling block last November when the Department of Justice (DoJ) filed a lawsuit to stop the deal.

Accordingly, the DoJ claimed that the deal would “eliminate a nascent competitive threat”. Finally, two companies announced this week that they jointly made a decision to abandon the deal.

Plaid is likely to continue focusing on the growth of its rapidly-evolving business as it recorded “an unprecedented uptick in demand for the services powered by Plaid.” According to the company, its customer base soared 60% last year as it now counts over 4,000 clients. 

Technical analysis: Price corrects lower 

Visa stock price closed 3.58% lower on Thursday to increase the weekly losses to over 6%. More importantly, this week’s plunge pushed the price action below the 100-DMA that currently trades at $205.27.

This technical indicator will now act as a resistance line during the next leg higher. On the other side, a strong support area is located near $196.00 where the ascending trend line and 200-DMA meet.

Summary

Visa and Plaid announced they are dropping their proposed $5.3 billion merger amid regulatory concerns from the DoJ.