Should you invest in MA stock after launching Mastercard Installments?

On Tuesday, Mastercard Inc. (NYSE:MA) shares edged lower 1% after launching Mastercard Installments, a Buy Now, Pay Later (BNPL) program. The company has linked with banking partners to allow in-store and online instalment payments for US, Australia and UK customers.

Mastercard becomes the latest payment service provider to adopt the BNPL model as consumers continue to embrace interest-free instalment payments for purchases. Recently, PayPal Inc. (NASDAQ:PYPL) agreed to pay $2.7 billion for Japan’s Paidy in a bid to boosting BNPL shopping. On the other hand, Square Inc. (NYSE:SQ) acquired Afterpay for $29 billion.

MA’s growth prospects

Mastercard shares trade at steep valuation multiples making the stock less attractive to value investors. However, the company’s growth prospects look exciting, with analysts expecting earnings per share to grow at an average annual rate of about 27.30% over the next five years.

Therefore, although the stock trades at a higher P/E ratio of 49.54, its long-term growth could be exciting to investors. Its launch of the BNPL program allows consumers to use its services to pay for more expensive products, thereby increasing spending.

MA Pullback to continue?

Technically, Mastercard shares seem to have recently pulled back after completing a channel breakout. As a result, the stock avoided surging to the overbought conditions of the 14-day RSI.

However, with shares yet to reach overbought levels, the current downward movement could continue in the short term. Therefore, investors can target extended declines at about $333.64 or lower at $314.48. 

On the other hand, $373.06 and $393.47 are crucial support zones.

Time to short MA shares?

In summary, although Mastercard shares are only up 4% over the last 12 months, thereby underperforming the S&P 500 index (which is up nearly 30%), the current pullback seems poised to continue.

In addition, the company shares look significantly overvalued based on the current P/E ratio. Therefore, although analysts expect its EPS to experience robust growth over the next five years, it could be time to short the MA stock.