Giant Tech stock under pressure: Visa Inc (NYSE: V)

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Visa Inc (NYSE: V) stock lost over 2.9% in the pre-market session Jan 31st, 2020 (Source: Google finance) after the company’s net income rose 10% to US$3.27 billion which fell short of analysts’ estimate for first-quarter revenue. The company is buying fintech startup Plaid for US$5.3 billion, as it intends to expand into the digital economy.

V in the first quarter of FY 20 has reported the adjusted earnings per share of $1.46, which is in line with the analysts’ estimates for the adjusted earnings per share of $1.46, according to IBES estimates from Refinitiv. The company had reported the adjusted revenue growth of 10 percent to $6.05 billion in the first quarter of FY 20, missing the analysts’ estimates for revenue of $6.08 billion. The revenue growth is due to continued growth in payments volume, cross-border volume and processed transactions. Net revenues growth was more than 11% on a constant-dollar basis.

Visa Inc. Stock (V)

First-quarter payments volume increased 8% over the prior year on a constant-dollar basis, 10% excluding China and the U.K. Cross-border volume grew 9% on a constant dollar basis. Total processed transactions, which represent transactions processed by Visa, were 37.8 billion, which reflects an 11% increase over the prior year.

Moreover, Visa had been spending more on rewards and perks such as airport lounge access, roadside assistance programs and travel insurance which led to increase in the operating expenses by 14% to US$2.04 billion in the first quarter.

Additionally, on January 28, 2020, the company had authorized a new $9.5 billion class A stock share repurchase program. On January 28, the company has declared a quarterly cash dividend of $0.30 per share of class A common stock payable on March 3, 2020, to all holders of record as of February 14, 2020. The company has repurchased 13 million shares of Class A common stock at an average price of $179.71 for $2.3 billion in the quarter. The company has authorized a new $9.5 billion share repurchase program. With this additional authorization and the $1.7 billion of remaining authorized funds as of December 31, 2019, the company have $11.2 billion available for share repurchases

For fiscal 2020, the company projects: class A earnings per share growth in mid-teens on an adjusted constant-dollar basis. Net revenues are expected to rise in low double-digit, for the fiscal year. The company now expects client incentives as a percentage of revenue to be in the high-end of its forecast range of 22.5per cent to 23.5per cent in 2020.

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