Mastercard’s stock (NYSE: MA) has lost 7.2% in the last week, underperforming the S&P 500 (down 6.1%). Further, the same trend was observed over the last ten days (-13% vs -11%) and one-month period (-7.5% vs -6.6%). Notably, the record-high inflation, the Russia-Ukraine crisis, and aggressive interest rate hikes by the Fed have amplified the possibility of the economy sliding into recession, leading to the recent stock market correction.
The company, a leading global payments solutions provider, surpassed the consensus estimates in the first quarter of 2022. Its net revenues increased 24% y-o-y to $5.2 billion, primarily driven by a 17% growth in the gross-dollar volume, followed by a 53% rise in the cross-border volume, and a 22% increase in the number of switched transactions. Further, the operating expenses as a % of revenues saw a favorable decrease. This coupled with the growth in the top line translated into a 44% increase in the net income to $2.6 billion. That said, the firm is heavily dependent on consumer spending levels. The record-high consumer inflation and the Federal Reserve’s tough stance on interest rates are likely to hurt consumer spending levels.
Now, is Mastercard stock set to drop further, or could we expect some recovery? We believe that there is a more than 80% chance of a rise in Mastercard stock over the next month (21 trading days) based on our machine-learning analysis of trends in the stock price over the last ten years. See our analysis on Mastercard Stock Chance of Rise.
We estimate Mastercard’s valuation to be around $407 per share which is 31% above the current market price.
Twenty-One Day: MA -7.5%, vs. S&P500 -6.6%; Underperformed market
(5% likelihood event; 80% probability of rise over next 21 days)
- Mastercard stock lost 7.5% over the last twenty-one trading days (one month), compared to a broader market (S&P500) decrease of 6.6%
- A change of -7.5% or more over twenty-one trading days is a 5% likelihood event, which has occurred 127 times out of 2515 in the last ten years
- Of these 127 instances, the stock has seen a positive movement over the next twenty-one trading days on 101 occasions
- This points to a 80% probability for the stock rising over the next twenty-one trading days
Ten Day: MA -13%, vs. S&P500 -11%; Underperformed market
(1% likelihood event; 58% probability of rise over next 10 days)
- Mastercard stock decreased 13% over the last ten trading days (two weeks), compared to a broader market (S&P500) decline of 11%
- A change of -13% or more over ten trading days is a 1% likelihood event, which has occurred 33 times out of 2516 in the last ten years
- Of these 33 instances, the stock has seen a positive movement over the next ten trading days on 19 occasions
- This points to a 58% probability for the stock rising over the next ten trading days
Five Day: MA -7.2%, vs. S&P500 -6.1%; Underperformed market
(3% likelihood event; 65% probability of rise over next five days)
- Mastercard stock declined 7.2% over a five-day trading period ending 06/17/2022, compared to the broader market (S&P500) correction of 6.1%
- A change of -7.2% or more over five trading days (one week) is a 3% likelihood event, which has occurred 66 times out of 2516 in the last ten years
- Of these 66 instances, the stock has seen a positive movement over the next five trading days on 43 occasion
- This points to a 65% probability for the stock rising over the next five days.
|S&P 500 Return||-10%||-23%||84%|
|Trefis Multi-Strategy Portfolio||-10%||-27%||190%|
 Month-to-date and year-to-date as of 6/20/2022
 Cumulative total returns since the end of 2016