Mastercard misses revenue target in Q4 2016 financials; share price drops 3%

Mastercard shares fell steeply yesterday after the company’s Q4 2016 financial report revealed that it missed Wall Street’s revenue estimate. The payment processor’s share price was down 2.8 per cent in midday trading on Tuesday.

Year-on-year revenue rose 9.5 per cent to $2.76bn for the three-month period, up from £2.52bn in Q4 2015, but this still fell narrowly short $2.79bn projection estimated by the market. Gross dollar volume increased nine per cent to $1.2tn, according to a Mastercard report.

The processor did beat Q4 estimated earnings, with net income being recorded at $0.86 a share (totalling $933m), a cent above the estimate and 4.8 per cent higher than was recorded over the same period 12 months previously.

Shares in Mastercard had previously risen 23% during the previous 12 months, closing at a price of $109.17 on Monday before the Q4 report was announced. At time of writing the share price currently stands at $106.33, down 2.6 per cent on closing share price Monday and showing some signs of recovery from a weekly low of $105.56.

Reasons for missing the estimate include the strengthening of the U.S Dollar, which could continue to hamper growth throughout 2017. Mastercard CFO Martina Hund-Mejean stated that the company’s current forecast estimates the strong U.S Dollar will negatively impact growth by two percent and net earnings by 3 per cent in 2017. Hund-Mejean also confirmed that she expected 2017 revenue growth to be slower in the first half of 2017 than H2, due to higher incentives.

In a conference call to discuss the results, Mastercard Inc CEO Ajay Banga also confirmed that Mastercard is pressing ahead with its plans to develop its digital payments platform Masterpass.

“Last year, Masterpass became the first digital payment service to work across all devices and channels, which helped drive acceptance and enabled consumers to shop online, in-store, or in-app using a bank-branded offering from the issuer of their choice,” Banja told the market.

Mastercard competitor Visa will release its Q4 2016 financials tomorrow.

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