In the third quarter of the financial year, Mastercard falls short of Wall Street estimates.
The financial services company reports income of £2.95 billion in the third quarter.
Mastercard earns £1.23 per share on an adjusted basis in the third quarter.
Mastercard Inc. (NYSE: MA) on Wednesday announced its third quarter financial results, which were weaker than analysts had expected. The company attributed the decline to the coronavirus pandemic, which continued to weigh on travel spending in the third quarter. COVID-19 has so far infected more than 44 million people worldwide and caused more than 1.17 million deaths.
The company’s shares fell about 5% in pre-trade trading on Wednesday and lost another 2.5% when the market opened. Including the price action, Mastercard is now exchanging hands at 228.55 pounds sterling per share. In comparison, the share had fallen to as much as £157 per share in March, when the impact of COVID-19 reached its peak.
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Mastercard’s financial results for Q3 compared to analysts’ estimates
Mastercard said its net profit for the third quarter was £1.15 billion, or £1.16 per share. This compares with higher net profit of £1.62 billion or £1.59 per share in the same quarter last year. In early October, Mastercard and its competitor Visa Inc. were accused of charging excessive fees.
On an adjusted basis, the financial services group generated net income of £1.23 per share in the third quarter, compared with £1.65 per share in the same period last year. The FactSet consensus for Mastercard’s earnings per share in the third quarter was a higher £1.27 per share.
In terms of revenues, the U.S. multinational company saw a decline from £3.17 billion last year to £2.95 billion in the last quarter. Experts had predicted a higher turnover of £3.05 billion for Mastercard in the third quarter.
The comments of CEO Ajay Banga on Wednesday
The gross dollar volume, the purchasing company emphasized on Wednesday, increased by 1% in the third quarter. The cross-border volume, on the other hand, fell by around 36%. According to CEO Ajay Banga:
“We are seeing encouraging progress in domestic spending, while travel spending remains a challenge”.
In an announcement last month, Mastercard announced that it had launched a test platform for the CBDC.
Mastercard has performed quite well on the stock market over the past year with an annual profit of almost 60%. At the time of writing, the American multinational financial services group has a market capitalization of £229 billion and a price-earnings ratio of 41.14.