Neil Patel, The Motley Fool
4 min read
In This Article:
-
Thanks to incredible financial performance that has propelled the stock, Visa’s current market cap is a massive $725 billion.
-
The rise of various fintech enterprises hasn’t hindered Visa’s success, as they all spur adoption of digital payments.
-
Investors seeking monster returns should practice patience.
Annual global gross domestic product (GDP) now totals in the ballpark of $110 trillion. It's not a surprise that with so much economic activity, leading businesses dealing with anything related to financial services should also be extremely valuable. The proof is in the numbers.
There's no shortage of massive financial enterprises carrying huge market caps. For instance, Visa (NYSE: V) is currently worth a jaw-dropping $725 billion. It's without a doubt one of the largest companies on the face of the planet.
But is this stock, which has soared 36% in the past 12 months (as of June 12), a smart buy right now? Here's what investors need to know.
Perhaps the best word to describe this year is "uncertainty." Ongoing trade negotiations have spurred fears about a recession. We saw this play out with the market tanking earlier in 2025, although it has recovered nicely. Investors are smart to think that this unfavorable economic backdrop should probably have a negative effect on companies' financial performance.
But here's where Visa stands out. During the fiscal 2025 second quarter (ended March 31), the dominant payment platform posted 9% year-over-year revenue growth. This was driven by strong cross-border volume, which has been a usual occurrence.
"Consumer spending remained resilient, even with macroeconomic uncertainty," CEO Ryan McInerney said.
This is one of the most profitable businesses. Visa's net profit margin was 48% in Q2, and in the past five years, it has averaged a stellar 52%. Running a scaled payment network is proving to be an extremely lucrative endeavor.
Looking ahead, investors have every reason to be optimistic that the growth will continue. Visa benefits from the rising adoption of digital payments, at the expense of cash and paper-based methods. And as the economy expands, so does spending activity. This all helps Visa handle more payment volume, which was $3.9 trillion in the most recent fiscal quarter.
Just because there are massive financial businesses, it doesn't mean younger rivals can't emerge. In the past decade, fintech companies have found success by leveraging technology to offer exceptional user experiences to their customers. Just in the payments industry, PayPal, Block, Adyen, and Shopify come to mind.
