One thing is clear at a high level after the latest earnings results from the biggest payment-technology companies: Consumers are still spending despite an uncertain economic environment.
Mastercard (MA) shares rose modestly in premarket trading Thursday after the firm reported better second-quarter results than analysts had expected.
MA eyes a Q2 earnings beat with strong cross-border volumes and rising demand for services, despite higher costs.
There are typically two participants in the stock market, those who enter and end each day on a flat note for their portfolios (meaning no positions) and rely on short-term intraday trading strategies to grow their capital, and then those who are out there hunting for the sort of businesses that will allow for a less volatile path forward for wealth creation. Those who focus on the long-term usually care about two things in their search for their next investment.
Mastercard (NYSE: MA) and American Express (NYSE: AXP) will issue their next quarterly dividends on August 8, 2025.
Stablecoins offer significant benefits for international transactions, but widespread adoption faces hurdles like convenience, security, and merchant-consumer currency agreements. Between 74% and 90% of stablecoin volume is tied to crypto transactions, and when spent on the real economy, card networks are still used. Stablecoins reduce costs and time in cross-border transactions, a huge addressable market that represents a small percentage of Mastercard's revenues.
Investors will be looking forward to Visa's (V) and Mastercard's (MA) quarterly reports next week on Tuesday, July 29, and Thursday, July 31, respectively.
Mastercard is evolving into a hybrid digital-traditional finance infrastructure, with 40% of revenue from high-margin, value-added services like AI, cybersecurity, and digital identity. My investment thesis: Mastercard's optionality in stablecoins, AI, and real-time payments is underappreciated, offering rerating potential beyond its 'boring' premium reputation. Risks include regulatory scrutiny and stablecoin disruption, but Mastercard's proactive partnerships and adaptability position it to turn threats into growth opportunities.
PayPal's lower valuation, direct commerce and lower leverage could make it the better buy over Mastercard now.
Mastercard remains a strong, brand-driven business with consistent double-digit revenue and earnings growth, outpacing Visa in growth dynamics. Recent results disappointed some, but seasonality explains quarter-over-quarter declines; year-over-year growth remains robust across all segments. Valuation has outpaced growth, making the risk/reward less attractive; I trimmed my position by 40% to lock in gains.
MasterCard (MA) possesses the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.