Contributor, Benzinga
December 17, 2021
$465.75
9.00[1.97%]
Last update: 7:51PM (Delayed 15-Minutes)
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Open458.480Close462.820
Vol / Avg.2.029M / 2.398MMkt Cap434.494B
Day Range457.310 - 462.98052 Wk Range357.850 - 490.000

Unmistakably one of the leading firms in the payment technology market, Mastercard Inc. (NYSE: MA) helps manage transactions for billions of consumers, businesses and large banks. A global pioneer, the company has helped enhance payment innovation worldwide to connect individuals and make handling cash much easier through a digital economy.

Mastercard’s headquarters are in Purchase, New York, years after the company was founded in 1966 by Wells Fargo, Crocker National Bank, First Interstate Bancorp and Bank of California. The firm’s new CEO Michael Miebach was appointed at the start of the year.

How to Buy Mastercard (NYSE: MA) Stock

If you want to buy Mastercard stock and currently have a brokerage account, log into your account and purchase the number of shares you want. However, if you do not have an account, here are some steps you can follow.

Step 1: Pick a brokerage.

A broker acts as the intermediary between you and the stock exchange. The customer places an order via their broker to buy a stock, and the broker carries out those instructions. If you decide to purchase shares in Mastercard, you tell your broker, usually via online order, to buy the number of shares you request at the price you set, and it carries out those instructions. 

In return, the broker charges you a fee for its services. Since fees vary depending on the broker, research costs and other aspects before setting up an account.

Step 2: Decide how many shares you want.

Once you’ve chosen a broker, fund your account and decide the number of shares to buy. Take into account the amount of risk you want to take and the percentage of your account attributed to Mastercard stock. 

Starting with a small investment and adding consistently over time is a strategy used by many investors. However, before you make your purchase, consider how you will enter the market. 

Step 3: Choose your order type.

This stage requires you to decide on how your position is executed. Different order types exist, but the primary two you need to know are market and limit orders. 

Market orders mean you acquire the shares at a price dictated by the market. Using market orders results in a high chance your order will be filled. 

Limit orders mean that the price you buy the stock at is decided by you. You can determine what price you buy the shares at, but you face the risk that the order won’t be filled if the price doesn’t hit your predetermined level. 

Step 4: Execute your trade. 

After you have completed the necessary steps to put you in a position to buy the shares, all that is left to do is hit the buy button. Once completed, you can monitor the stock and your other positions by navigating to the correct tab on your brokerage platform.

Where to Buy Mastercard 

Finding a broker can be a complicated task, especially for inexperienced traders. It's essential to understand different broker fees and ensure the broker is regulated. Benzinga provides a list of the best brokers that allow you to purchase Mastercard shares on their platform.

Mastercard Stock History & Value

Mastercard had an initial public offering (IPO) of its shares on May 25, 2006, raising $2.4 billion, the biggest US IPO in two years at the time. Its initial IPO price was $39, $1 below its estimated price range. 

Looking into today's figures, the growth of Mastercard is apparent, increasing tremendously from its initial IPO to reach a current market cap of $344 billion. The transition to electronic payments has been a considerable driver of Mastercard’s share price. Its share price reached highs of $401.50 on April 26, wiping out losses from the pandemic.

The growth of the company can be attributed to its dominance and competitive advantage in the market, alongside rival Visa Inc. (NYSE: V). However, a turbulent month for the firm has seen its share price fall this year after a solid first and second quarter.

Recent threats from more than a dozen retailers stem from concerns regarding transaction fees, which have reduced the company's share price in the last month, down 2.24%. 

Mastercard: What Analysts Are Saying

Mastercard has received high praise from analysts, with projections for the company's next earnings release on January 27 expecting strong growth for the firm. Revenue is predicted to be up 25.22% from the prior-year quarter. At the time of writing, financial analyst ranking firm Tipranks shows 11 buy ratings for the company.

Raymond James Bear Case

As mentioned, the most recent commentary on Mastercard has been positive. However, the company’s price target was lowered by Raymond James analyst John Davis to $430 from $453 over a month ago.

UBS Bull Case

In November, UBS analyst Rayna Kumar assumed coverage of Mastercard with a buy rating, setting a price target of $448. The analyst believes “the largest growth opportunities for Mastercard are in Latin America, Asia Pacific and Middle East & Africa.”

Kumar cited increasing cross-border travel demand as the reason for the above-consensus view.

Pros and Cons of Mastercard 

Pros:

  • Future earnings: Mastercard will be hoping to display strength in its next earnings release in January. It is projected to earn $2.20 per share, representing year-over-year growth of 34.15%. In addition, revenue is predicted to grow 25.22% from the previous-year quarter to $5.16 billion.
  • Dividends: Mastercard recently announced it had raised its quarterly dividends to 49 cents from 44 cents per share.
  • Credit risk: Although Mastercard competes with credit processors such as American Express Co. (NYSE: AXP), the company does not issue loans. Subsequently, it does not carry credit risk, which impacts profits when a downturn hits the economy.

Cons: 

  • Competition: The increased use of online payments over the years has only expanded the number of competitors in the market. Rivals such as PayPal Holdings Inc. (NASDAQ: PYPL), Square, now called Block Inc. (NYSE: SQ) and Discover Financial Services (NYSE: DFS) have achieved success in the field and been an integral part of the online payments market.
  • COVID-19: The uncertainty over the pandemic is quite apparent. However, the growth of the omicron variant may see a return to travel bans and have an impact on cross-border transactions, which constituted roughly a third of its revenue in Q4 2019. Mastercard reported a steep drop in overseas spending on its cards in its first quarter of 2021.

Is Mastercard a Buy, Sell or Hold?

The preferred outlook on Mastercard from Wall Street analysts signals a buy rating as the stock looks reasonably bullish. In 2021, the company’s shares made a strong start, with steady gains in the first quarter. Although, in recent times, its share price has shown no real direction. 

A rise in dividends and the expectation of improved profits for the current quarter are attractive qualities for the stock. In addition, if travel restrictions are lifted, the company may see cross-border transactions reach pre-pandemic levels and help grow its revenue. As a result, there are limited arguments against the stock, although the uncertainty of the market can play a significant role in Mastercards valuation.

Frequently Asked Questions

Q

Is Mastercard a credit card?

A

Mastercard’s primary business is via partnerships with financial institutions, offering its payment network processing services. However, Mastercard does offer credit cards that can be used for everyday purchases such as in stores, online payments or places that do not accept cash.

Q

Can Mastercard be used anywhere?

A

Mastercard is issued by member banks with the Mastercard logo, which means that the card can be used anywhere the Mastercard brand is accepted. Businesses will need to accept Mastercard for you to be able to make your transaction.

About Sam Boughedda, Stock Market Analyst

He is an expert in the following spaces: stock market news writing, analysis, and research.