Visa Inc. shares advanced on a smaller-than-expected drop in spending by cardholders overseas, where governments have restricted tourism to stem the coronavirus pandemic.

Cross-border volume fell 29 per cent in the company’s fiscal fourth quarter, less than the 33 per cent analysts were anticipating, according to a statement Wednesday. Visa’s performance contrasts with results posted earlier in the day by Mastercard Inc., whose cross-border fees slid more than expected.

Key Insights

  • Investors keep a close eye on cross-border volume because the transactions are more profitable for Visa and its rivals. Overall profit at the card network dropped 29 per cent to US$2.1 billion, or 97 cents a share, missing the US$1.09 average of analyst estimates compiled by Bloomberg.
  • The firm has seen a pick-up in spending on its cards in the U.S., aided by government stimulus and extra unemployment insurance. Purchase volume in the U.S. climbed 7.5 per cent to US$1.1 trillion, outpacing the 4 per cent advance in spending on Visa’s cards globally.
  • Visa shelled out US$1.7 billion on rebates and incentives to lure banks and retailers to route transactions over its network. That was below the US$1.77 billion average of analyst estimates.

Market Reaction

The shares rose as high as US$185.30 at 4:07 p.m. in extended New York trading. The stock has dropped 3.7 per cent this year compared with the 22 per cent advance of the S&P 500 Information Technology Index.