LearnBonds.com

America’s $2trn stimulus charges Visa stock price

Visa (NYSE: V)  saw its stock price post its largest single-day gain on Tuesday trading since 2011, driven by a $2trn coronavirus stimulus deal between the White House and Senate leaders to combat the threat of a recession. The US credit card firm’s stock price may extend this positive momentum into Wednesday trading, as investors are cheering the reports of the end to temporary business closures, US President Donal Trump hopes to normalize the economy by mid-April.

Visa expects to generate the second-quarter sales growth 2.5 to 3.5 percentage points lower compared to its previous forecast at its first-quart. The company blamed lower than expected cross border payments for downward revenue revision. However, Visa lifted almost 14% at $154.53 on the New York Stock Exchange.

America's $trn stimulus charges...

“Cross-border growth rates have deteriorated week by week since the coronavirus outbreak in China, and trends through February 28, 2020, do not yet fully reflect the impact of the coronavirus spreading outside of Asia. As such, we anticipate that this deteriorating trend has not bottomed out yet,” the company said in a Securities and Exchange Commission filing.

Although Visa recently slashed its second-quarter guidance due to the negative impact of the pandemic, investors are keen to buy the dip despite short-term pain. The economic stimulus is playing a key role in strengthening investor’s sentiments. The $2trn package includes $350bn in assistance to small businesses, $100bn in assistance for hospitals and $500bn for corporations.

The share price of MasterCard (NYSE: MA) also posted its largest single-day gain since 2011 amid economic package. MasterCard expects to generate low single-digit revenue growth for the first quarter compared to the earlier forecast for high single-digit revenue growth. The company plans to reduce its travel, entertainment, advertising, and marketing expenses in the following quarters to support its margins. Stock prices of other payment services companies like Square (NYSE: SQ) and PayPal (NASDAQ: PYPL) also soared despite the short-term impact on financial numbers.

All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.
Avatar

Based in Saudi Arabia, Siraj has a strong understanding of and passion for accounting and finance. He has worked for international clients for many years on several projects related to the stock market, equity research and other business, accounting and finance related projects. Siraj is a published financial analyst on the world's leading websites including SeekingAlpha, TheStreet, MSN, and others.

HTML Snippets Powered By : XYZScripts.com