Mastercard warns of revenue slowdown as travel peaks

THE MasterCard on Thursday forecast current-quarter revenue growth below market estimates. Wall Streetsaying the pent-up travel demand momentum will slow going forward.

THE company payments said travel to most regions had recovered to pre-pandemic levels, fueling fears of a tough environment in 2023 as the economy weakens.

The company’s shares fell nearly 1.5%.

After the interest rate increases by the Federal Reserve for most of last year, the US economy has started to show some signs of a slowdown, with widespread layoffs and fears of a recession encouraging consumers to save more, which is likely to hurt growth in the housing sector. tourism.

“The vast majority of regions have already reached this state where they are growing at a healthy pace, but not at a fast pace,” said Chief Financial Officer Sachin Mehra, adding that the Asia-Pacific region is an exception as it still has room for growth as China withdraws measures of social isolation against Covid.

“Mastercard payment volume growth in the fourth quarter of 2022 remained strong. The question, however, is how long this momentum will be sustained,” said Kevin Kennedy, an analyst at investment research firm Third Bridge.

The international volume, which tracks spending on cards outside the country of issue and is an indicator of travel demand, increased 42% in the first three weeks of January.

But that growth was largely due to a lower base compared to last year, when the Omicron variant of the coronavirus was spreading, analysts at Jefferies wrote in a note.

Mastercard said it expects first-quarter revenue to grow in the “high single-digit range,” while analysts estimate 10.7% growth, according to data from Refinitiv.

The forecast downplayed the impact of a better-than-expected result for the fourth quarter. In adjusted terms, Mastercard earned $2.65 per share for the three months ended December. Analysts, on average, were expecting $2.58 per share. Net income rose 12% to $5.8 billion.