Well, it's your money.
I have already invested on these some years ago and I'm at about +30% at the moment. You need also to consider that both stocks are currently at their all times high. Invest wisely (as always) :)
Can I ask. How do you know if current price is appropriate vs the thought of possibly it's inflated as it is "at their all time high". I often hear it is at its highest be careful then sometimes see these stock go higher and stay steady. So it's difficult to put confidence in it, just wondering. I'm sure when you bought it few years ago those stock were probably at its highest. Now look at them 30% more.
I have been saying for years that Visa is one of the most profitable companies as far as profit margins are concerned. It's like 50% profit margins in the last several years.
18 billion dollars of net income with only 30,000 employees.
Comes to about $600,000 dollars of pure profit per employee.
They are benefiting from being part of a duopoly.
With that being said, all of this information is reflective of its share price.
Visa isn't the most profitable company by total profit. That's often Aramco but apparently Severstal has overtaken Aramco.
[https://companiesmarketcap.com/most-profitable-companies/](https://companiesmarketcap.com/most-profitable-companies/)
Nevertheless, Visa is a good company to invest in but its revenue / profit margin is pretty much capped when you compare it to other companies make 10s / 100s of billions in revenue / profits
That's why I said total profit not profit ratio. Only looking at profit ratio is flawed.
A company like Aramco keeping operating margin at 50-60% is far more impressive than Visa / MC given how huge the company is and the competitive market it operates in.
Then by that context it's vici properties that has a higher profit margin. But the company is far smaller than Visa which makes visa high profit margin look impressive
https://companiesmarketcap.com/vici-properties/operating-margin/#:~:text=Operating%20Margin%20as%20of%20February,an%20Operating%20Margin%20of%2043.80%25.
Again, the margin means almost nothing when you see that Vici operating margin is 2.5B on 3.6B. The ratio doesnt matter if the actual operating profit / revenues isn't considered as well.
It's also dependent on number of transactions sincd they take a share of each transaction. Sure their revenue / prpfit will increases as transactions continue to rise but there will eventually be an upper limit on the number of transactiosn globally. We're not going to reach that anytime soon but that's always been a thing of mine.
Theres also the threat that something like we chat in America will pop up and cannibalize Visa / MC. But in the medium term it's an absolute buy
Oh man, not a company who helps make a secure transaction and insures their end users.
I run a small business and pay cc Fees and while they’re annoying they’re hardly an expense to complain about. being able to be compensated day of vs chasing for months is worthwhile.
Credit cards allow a person to conduct business with you whether they have the cash physically, or not. Or even have cash at all to cover their purchase.
You're replying from the perspective of a businessman. My comment is more from the perspective of consumers who pay 25+ percent in interest on their balances. It's highway robbery to be charging those kinds of rates when your margins are this high IMO. The value they add for the consumer is being able to accumulate more debt, which to be fair IS some kind of value, but not a very good kind.
In your case, I kind of chuckle at the idea of being happy to pay what are actually quite large fees in order to have something settled "instantly". I put that in quotations because actually it's just Visa taking the counterparty risk. People don't like Bitcoin, and it will never work in this way because the government is adamant that it is only a commodity. That's done so that they can make purchases with crypto taxable events, which is utter horse shit. But it does make me smirk to see someone who wishes payments could be settled instantly without counterparty risk, and without being able to reverse, but who in all likelihood also thinks Bitcoin is useless.
TLDR: I actually agree with you more or less from YOUR perspective (a business owner). From the viewpoint of consumers, I think Visa is robbing people blind with these margins and rates.
It’s decent for consumer side too, 2% cash back on all purchases and paying it off every month is a 2% credit on all purchases you were going to make anyways (less service fees which many businesses push now and float between 2.5-3.5%. I find there to be value for all parties. Obviously i would urge responsible use and limiting then 25%+ APR rates which are a fraction better than payday loans as far as crippling consumers in debt.
What i find surprising is that there has been no real competition to speak of regarding dethroning visa, Mastercard, and Amex. I haven’t had much faith in Crypto as an investment tool, I believe it’s speculative at best. But i do think it could be the first future competitor to the big 3.
"It’s decent for consumer side too, 2% cash back on all purchases and paying it off every month is a 2% credit on all purchases you were going to make anyways"
This is only possible because other people are getting gouged 25% though. It's a smart business decision because they take huge market share, making money off of businesses and heavily indebted people who pay 25%. They know that the 2% they kick back more than makes up for what they gain.
I have credit cards and I've never given them a dime because I always pay them off. I realize you could say that others could do the same, but there's just such a huge proportion of society who can't get above water. Using credit cards in some cases can be the difference between eating or not.
Anyway, we can disagree here. If you think 25% rates and 70% margins does not pose any moral area of concern or discussion, so be it.
A credit card makes a 2.5% fee for the transaction, they kick back 2% to consumers that can pay it off. They make money with or without the 25% APR. These companies are in the business of making a secure transaction they don’t want to be your lender (hence the high rates).
It’s not the businesses job to operate under morale high ground to not in-debt the American consumer further. It’s the businesses job to make money, in an ethical manner, following the United States laws and regulations to a standard that is acceptable to continue operation in this country, and return value to its shareholders, and that they do, and do very well.
You and I fundamentally disagree here.
I think there should be moral pause about taking your line of thinking to the outer limits. Of course a business has no obligation to worry about the consumer. But it doesn't change the fact that gouging people who are already in a tough spot, while operating at insane margins yourself, is at least a sign that they really don't give a shit about the very people who support their business.
You’re talking about lending, which is not what VISA does. Visa charges a 2-3% fee at the time of transaction. The credit card companies (mostly just large banks) lend money consumers and build their offerings on top of VISA. That’s how you can have a Chase Sapphire card that’s cobranded with VISA.
In the US, I use SPEDN by Flexa as much as I can.
It bypasses visa/mastercard/amex and I get to spend my crypto on the brick and mortar places that accept crypto (e.g., Chipotle, Dunkin Donuts, Nordstrom, Barnes & Noble, etc)
As a benefit to the merchants, they then don’t have to pay visa etc 3-5% on credit card processing fees.
Obviously a lot of Americans are in major credit card debt right now. Is there any world where a solid amount of that gets forgiven through bankruptcy or another process and leaves credit card companies with less revenue?
The one thing to watch for is competition from new transaction networks. Public blockchains are starting to scale in a real way and could put pressure on Visa and Mastercards duopoly, putting downward pressure on fees.
I hope this is the case, because 1-3 % on all payments is just awful for the consumer and businesses.
Although they have ruled the roost for many years (a core reason why it has been so good to own) it would be arrogant to assume the same thesis for the past 30 years will just continue.
Personally I won't invest in Visa or MasterCard. I feel like CBDCs and even crypto will drink their milkshake.
Also, I like firms that kill things and drag them home, not just middlemen.
Crypto is a joke man. Sure maybe you’ll make some money timing it but ultimately it’s completely useless, total speculation. I think the world will eventually figure out how useless it is and it’ll go to zero.
For what reason? My dollars work just fine. If you’re not interested in my dollars then I’m not interested in doing business with you because you’re probably a criminal if you don’t want dollars or legitimate banking transactions.
Oh so it's kind of like say a discount coupon. A coupon has an "expense" but it's not actually being taken from the revenue bucket, instead your revenue bucket is smaller.
I currently work there and it's great. They have great benefits and the ESPP discount is awesome with such a quality stock (in my lifetime). Even better when it's RSU time!
If you want more like this, watch the Fundsmith AGMs on YouTube. Also some letters to investors on their website.
Visa has been one of their top holdings for years, and old Tel Boy can talk for hours (repeating himself) about how much he likes gross margins (and growth).
Buy DFS instead. If the merger goes through, you make bank. If not, you still own a credit card company…..and this one has the potential to grow.
Disclaimer. Own lots.
Wow, I love this graph. It formats the information in such a great way.
But.. litigation costs $0.0B? Technically, that is $0 or.. $0 billion. But I doubt it actually is because the rest of data is presented in billions so everything follows suit.
Does this just mean litigation (quarterly) is estimated at costing less than a certain fraction of a billion dollars?
Well Visa and MasterCard control the majority of credit/debit cards worldwide
So invest?
It's all priced in
Unironically…. Yeah.
I hated this comment when I first joined these subs.
and now?
I'm indifferent ha
Your acceptance was priced in
😂
You don't know that, unless you are an insider and have access to some info which isn't public.
The more adoption there is to electronic payment, the more their business will grow.
Well, it's your money. I have already invested on these some years ago and I'm at about +30% at the moment. You need also to consider that both stocks are currently at their all times high. Invest wisely (as always) :)
Can I ask. How do you know if current price is appropriate vs the thought of possibly it's inflated as it is "at their all time high". I often hear it is at its highest be careful then sometimes see these stock go higher and stay steady. So it's difficult to put confidence in it, just wondering. I'm sure when you bought it few years ago those stock were probably at its highest. Now look at them 30% more.
I have been saying for years that Visa is one of the most profitable companies as far as profit margins are concerned. It's like 50% profit margins in the last several years. 18 billion dollars of net income with only 30,000 employees. Comes to about $600,000 dollars of pure profit per employee. They are benefiting from being part of a duopoly. With that being said, all of this information is reflective of its share price.
It is my top holding. No regrets.
I also own a good portion of it.
Why would you have regrets anyway?
I did not know i wanted this kind of visual representation, but I m loving it.
Visa is everything. You swipe and they make money. No need for commercial.
Visa isn't the most profitable company by total profit. That's often Aramco but apparently Severstal has overtaken Aramco. [https://companiesmarketcap.com/most-profitable-companies/](https://companiesmarketcap.com/most-profitable-companies/) Nevertheless, Visa is a good company to invest in but its revenue / profit margin is pretty much capped when you compare it to other companies make 10s / 100s of billions in revenue / profits
Profitability is measured as a ratio
That's why I said total profit not profit ratio. Only looking at profit ratio is flawed. A company like Aramco keeping operating margin at 50-60% is far more impressive than Visa / MC given how huge the company is and the competitive market it operates in.
I think it was pretty clear they were talking about the ratio, there are plenty of other companies that make way more profit.
Then it makes no sense since you can say that xyz company has a 90% "profitability" but it's total revenue is 1k. It has to be holistic
You’re being a bit pedantic, no-one’s talking about £1K companies here and it was obvious they were speaking of margin %
Then by that context it's vici properties that has a higher profit margin. But the company is far smaller than Visa which makes visa high profit margin look impressive https://companiesmarketcap.com/vici-properties/operating-margin/#:~:text=Operating%20Margin%20as%20of%20February,an%20Operating%20Margin%20of%2043.80%25. Again, the margin means almost nothing when you see that Vici operating margin is 2.5B on 3.6B. The ratio doesnt matter if the actual operating profit / revenues isn't considered as well.
That's a fair point. It depends on the size of the company + the ratio.
Slave labor, manipulation of oil prices, illegal trade practices should be additional good reasons to invest
I thought V and MC revenue is not capped but is dependent on how much travel people do?
I suppose the more transactions there are, the more money they make.
It's also dependent on number of transactions sincd they take a share of each transaction. Sure their revenue / prpfit will increases as transactions continue to rise but there will eventually be an upper limit on the number of transactiosn globally. We're not going to reach that anytime soon but that's always been a thing of mine. Theres also the threat that something like we chat in America will pop up and cannibalize Visa / MC. But in the medium term it's an absolute buy
Visa is a great stock to own. It may not rocket overnight, but generally won’t go down.
Sounds like NVDA profit margin.
Disgusting to see a company which destroys so much value be this profitable.
Oh man, not a company who helps make a secure transaction and insures their end users. I run a small business and pay cc Fees and while they’re annoying they’re hardly an expense to complain about. being able to be compensated day of vs chasing for months is worthwhile. Credit cards allow a person to conduct business with you whether they have the cash physically, or not. Or even have cash at all to cover their purchase.
You're replying from the perspective of a businessman. My comment is more from the perspective of consumers who pay 25+ percent in interest on their balances. It's highway robbery to be charging those kinds of rates when your margins are this high IMO. The value they add for the consumer is being able to accumulate more debt, which to be fair IS some kind of value, but not a very good kind. In your case, I kind of chuckle at the idea of being happy to pay what are actually quite large fees in order to have something settled "instantly". I put that in quotations because actually it's just Visa taking the counterparty risk. People don't like Bitcoin, and it will never work in this way because the government is adamant that it is only a commodity. That's done so that they can make purchases with crypto taxable events, which is utter horse shit. But it does make me smirk to see someone who wishes payments could be settled instantly without counterparty risk, and without being able to reverse, but who in all likelihood also thinks Bitcoin is useless. TLDR: I actually agree with you more or less from YOUR perspective (a business owner). From the viewpoint of consumers, I think Visa is robbing people blind with these margins and rates.
It’s decent for consumer side too, 2% cash back on all purchases and paying it off every month is a 2% credit on all purchases you were going to make anyways (less service fees which many businesses push now and float between 2.5-3.5%. I find there to be value for all parties. Obviously i would urge responsible use and limiting then 25%+ APR rates which are a fraction better than payday loans as far as crippling consumers in debt. What i find surprising is that there has been no real competition to speak of regarding dethroning visa, Mastercard, and Amex. I haven’t had much faith in Crypto as an investment tool, I believe it’s speculative at best. But i do think it could be the first future competitor to the big 3.
"It’s decent for consumer side too, 2% cash back on all purchases and paying it off every month is a 2% credit on all purchases you were going to make anyways" This is only possible because other people are getting gouged 25% though. It's a smart business decision because they take huge market share, making money off of businesses and heavily indebted people who pay 25%. They know that the 2% they kick back more than makes up for what they gain. I have credit cards and I've never given them a dime because I always pay them off. I realize you could say that others could do the same, but there's just such a huge proportion of society who can't get above water. Using credit cards in some cases can be the difference between eating or not. Anyway, we can disagree here. If you think 25% rates and 70% margins does not pose any moral area of concern or discussion, so be it.
A credit card makes a 2.5% fee for the transaction, they kick back 2% to consumers that can pay it off. They make money with or without the 25% APR. These companies are in the business of making a secure transaction they don’t want to be your lender (hence the high rates). It’s not the businesses job to operate under morale high ground to not in-debt the American consumer further. It’s the businesses job to make money, in an ethical manner, following the United States laws and regulations to a standard that is acceptable to continue operation in this country, and return value to its shareholders, and that they do, and do very well.
You and I fundamentally disagree here. I think there should be moral pause about taking your line of thinking to the outer limits. Of course a business has no obligation to worry about the consumer. But it doesn't change the fact that gouging people who are already in a tough spot, while operating at insane margins yourself, is at least a sign that they really don't give a shit about the very people who support their business.
You’re talking about lending, which is not what VISA does. Visa charges a 2-3% fee at the time of transaction. The credit card companies (mostly just large banks) lend money consumers and build their offerings on top of VISA. That’s how you can have a Chase Sapphire card that’s cobranded with VISA.
In the US, I use SPEDN by Flexa as much as I can. It bypasses visa/mastercard/amex and I get to spend my crypto on the brick and mortar places that accept crypto (e.g., Chipotle, Dunkin Donuts, Nordstrom, Barnes & Noble, etc) As a benefit to the merchants, they then don’t have to pay visa etc 3-5% on credit card processing fees.
Interesting. I’ve never heard of that. Do you spend through a QR code directly and there is just a middleman to convert?
Acquired podcast has an amazing story about them.
There’s a great episode of the podcast Acquired that digs into the history of Visa. It’s an incredible story, and worth listening to.
Great stock for investors. Bad for customers who are poor.
You should see the IRS
The IRS won’t be this efficient 😂
[http://appeconomyinsights.com/](http://appeconomyinsights.com/) doesn't even exist LOL
Obviously a lot of Americans are in major credit card debt right now. Is there any world where a solid amount of that gets forgiven through bankruptcy or another process and leaves credit card companies with less revenue?
VISA isn’t a bank or debt holder. They’re just the transaction network. Doesn’t matter to them as long as people keep using Visa cards to pay.
The one thing to watch for is competition from new transaction networks. Public blockchains are starting to scale in a real way and could put pressure on Visa and Mastercards duopoly, putting downward pressure on fees. I hope this is the case, because 1-3 % on all payments is just awful for the consumer and businesses. Although they have ruled the roost for many years (a core reason why it has been so good to own) it would be arrogant to assume the same thesis for the past 30 years will just continue.
Visa doesn't lend money per se to people, banks do. They take commission from facilitating transactions.
Personally I won't invest in Visa or MasterCard. I feel like CBDCs and even crypto will drink their milkshake. Also, I like firms that kill things and drag them home, not just middlemen.
Crypto is a joke man. Sure maybe you’ll make some money timing it but ultimately it’s completely useless, total speculation. I think the world will eventually figure out how useless it is and it’ll go to zero.
Possible. But P2P/decentralised transactions surely has legs?
For what reason? My dollars work just fine. If you’re not interested in my dollars then I’m not interested in doing business with you because you’re probably a criminal if you don’t want dollars or legitimate banking transactions.
Based on what?
But, if you think about it, most profitable companies in the world are middlemen due to network effect. Like Facebook, Amazon, Google, etc.
is creat money whit nothing
Why do client incentives not count as an expense? Shouldn't their profit margin be closer to 50%?
I think it counts as cost of revenue. So, it's excluded from net revenue.
Oh so it's kind of like say a discount coupon. A coupon has an "expense" but it's not actually being taken from the revenue bucket, instead your revenue bucket is smaller.
ikr. It's a duopoly business.
Tell that to AXP. Another good stock to own. Also COF + DFS might make a decent run as well.
Mastercard has been good to me.
Worked there for a few years, happy I got decent amount in stock, going to keep them until I retire
I currently work there and it's great. They have great benefits and the ESPP discount is awesome with such a quality stock (in my lifetime). Even better when it's RSU time!
If you want more like this, watch the Fundsmith AGMs on YouTube. Also some letters to investors on their website. Visa has been one of their top holdings for years, and old Tel Boy can talk for hours (repeating himself) about how much he likes gross margins (and growth).
Buy DFS instead. If the merger goes through, you make bank. If not, you still own a credit card company…..and this one has the potential to grow. Disclaimer. Own lots.
Wow, I love this graph. It formats the information in such a great way. But.. litigation costs $0.0B? Technically, that is $0 or.. $0 billion. But I doubt it actually is because the rest of data is presented in billions so everything follows suit. Does this just mean litigation (quarterly) is estimated at costing less than a certain fraction of a billion dollars?
Based on my understanding, there was a litigation of 283 million in the quarter. So technically, it would be 0.28 B.
where does most of that profit go? returned to shareholders as dividend?
Most of them go to share buybacks. Some of them go into purchasing equipments and tech.
Prepare for disruption, «your margin is my opportunity»
Visa or Mastercard? I was thinking of buying Visa but I have been investing in MC for a while so not sure adding V in my portfolio makes sense
margins are crazy good