Visa Inc. (NYSE: V) made history on November 27, 2024, as its stock price climbed to a record $316, underlining the payments giant’s resilience and growth in an increasingly digital economy.
This remarkable feat highlights the company’s robust growth, with its stock surging by 21.71% year-to-date.
As of the latest trading session, Visa trades at $315, reflecting a modest one-day gain of 0.15% and a monthly increase of 2.7%. Despite this impressive performance, technical indicators and external factors suggest the possibility of a short-term pullback.
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Dominance in the global payments ecosystem
Visa’s success can be attributed to its dominant position in the global payments market. In fiscal 2024, the company reported net revenue of $35.9 billion, marking a 56% increase over five years, driven by the transition to cashless payments.
In the fourth quarter alone, revenue rose 12% year-over-year to $9.6 billion, while earnings per share (EPS) increased by 16% to $2.71. Visa achieved an impressive 66% operating margin last quarter, reporting $6.3 billion in operating income on $9.6 billion in revenue.
The company also generated $6.4 billion in free cash flow, showcasing the profitability of its scalable payments platform.
Additionally, Visa has maintained a shareholder-friendly capital return program, spending $16.7 billion on share buybacks and $4.2 billion on dividends in the last fiscal year.
According to data from StockAnalysis, Visa has achieved a 14.97% year-over-year dividend growth rate and maintains a conservative payout ratio of 24.25%, providing ample room to reward investors with consistent and growing dividends.
Positive momentum and emerging risks
Visa’s recent surge follows strategic acquisitions, including plans to purchase Prosa and Featurespace in 2025 to bolster fraud prevention. Analysts at Macquarie have recognized these strengths, raising their price target to $335, citing robust Q4 performance and favorable indicators for FY2025.
However, Visa faces potential headwinds. The European Commission has opened a preliminary investigation into fees charged to retailers, which could impact profitability if regulatory actions follow.
Moreover, competition from cryptocurrencies and stablecoins poses a long-term risk to Visa’s dominance.
Short-term technical concerns
Despite Visa’s robust fundamentals, technical analysis indicates potential short-term headwinds for the stock. According to a detailed analysis of the one-day (1D) chart by TradingShot, the Moving Average Convergence Divergence (MACD) has formed a cup sequence on a Bearish Cross.
Historically, this pattern has often signaled short-term corrections within Visa’s two-year ascending channel, raising concerns for traders monitoring its next move.
Previous instances of similar signals in November 2022, February 2023, and July 2023 led to pullbacks ranging from 7.30% to 10.95%.
A similar correction now could see Visa retracing to $295, aligning with the 50-day moving average and the 0.382 Fibonacci retracement level.
These levels, combined with Visa’s current position near the upper boundary of its ascending channel, suggest a potential pullback as part of the stock’s natural consolidation phase.
Long-term growth opportunities
Despite the risk of a short-term correction, Visa’s strong fundamentals make it a compelling long-term investment. A pullback to $295 could present a strategic entry point for investors seeking to capitalize on Visa’s sustained growth trajectory.
Visa’s unmatched network effects, encompassing 4.5 billion cards and 130 million merchant acceptance locations, make it highly resilient to disruptions.
Although the stock’s current valuation, with a price-to-earnings ratio of 32.38, may deter some buyers, the company’s strong historical performance and robust growth prospects justify a buy-and-hold strategy, particularly for investors using dollar-cost averaging.
Featured image via Shutterstock
