Square, Visa, PayPal and MasterCard are now worth more than the Wall Street banks’ “big six”.
Payments over the internet have received a solid upswing during the corona crisis, and this is reflected in the pricing of companies that offer digital payment solutions.
Square, Visa, PayPal and MasterCard now have a total market value of $ 1.070 billion, while the banks’ “big six” (JPMorgan, Bank of America, Wells Fargo, Citigroup, Morgan Stanley and Goldman Sachs) are priced at less than 900 billion by comparison dollars aggregated.
This is despite the fact that the payment companies ‘balances are still significantly slimmer than the banks’.
Holberg likes MasterCard
MasterCard has for many years been a favorite with Holberg Global manager Harald Jeremiassen (pictured), and today constitutes the ninth largest investment in the fund.
BULL ON MASTERCARD: Harald Jeremiassen in the Holberg Foundations.
– If you are going to run a restaurant, you want the customer to make up for it. One network becomes too risky, and you must have at least two. Over time, we have therefore gained two dominant players with long-term growth in a profitable oligopoly market, ie MasterCard and Visa, he says in a presentation on Holberg’s website.
Visa is priced at 440 billion dollars just after opening on Wall Street on Wednesday, while MasterCard is up to 343 billion dollars. PayPal and Square are priced at respectively. 219 and 69 billion dollars
– Very positive driver
MasterCard can point to an annual profit growth of 20 percent over a longer period of time. According to the manager, the trend goes back more than ten years.
– Ten percent has been an increase in volume – more cards have been issued and we use cards more. In addition, the company has increased margins and bought back its own shares, he continues.
– In the short term, earnings are somewhat affected by the corona crisis because the number of payments has decreased, especially physically and across national borders. In the long term, MasterCard (and Visa) enjoy far higher market shares in online payments – and far higher profitability. So the fact that we are now all under pressure to pay online is a very positive driver for these companies, says the Holberg manager.
Banks under pressure
Payment companies have increased their presence in traditional banking activities in recent years, and have been rewarded with price increases from investors.
By Tuesday, Square was able to tell, according to CNBC, that users of their Cash-App can get early access to earned salary, a scheme users of PayPal-owned Venmo already enjoy.
At the same time, the traditional banks have come under pressure in a climate with lower interest rates and fears of increased defaults as a result of the corona crisis.