Jan 26 (Reuters) – Mastercard Inc ( MA.N ) forecast revenue growth for the current quarter less than Wall Street estimates on Thursday, saying growth from subdued travel demand will diminish going forward.
The payments company said travel in most regions had recovered to levels seen before the pandemic, fueling fears of a tough environment in 2023 as the economy loses steam, sending its shares down nearly 2% to $375.11.
After the Federal Reserve raised rates for most of last year, the economy is starting to show some signs of slowing, with layoffs and fears of a recession scaring consumers into saving more, which is likely to affect the increase in travel.
“The vast majority of regions have now reached the point where they are growing at a healthy rate, but not at an accelerating rate,” said chief financial officer Sachin Mehra, adding that Asia Pacific is an exception as there is still room. for growth as China reopens.
“Mastercard’s 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, analyst at investment research firm Third Bridge.
Cross-border volume, which tracks spending on cards beyond its country of issue and is a gauge of travel demand, rose 42% during the first three weeks of January.
But that increase was largely due to a lower base last year when the Omicron variant of the coronavirus was spreading, Jefferies analysts wrote in a note.
Mastercard said it expects first-quarter revenue to rise in the “high single-digit range,” while analysts had estimated a 10.7% increase, according to Refinitiv IBES data.
The decline forecast overshadowed the company’s fourth-quarter profit miss.
Excluding one-time items, Mastercard earned $2.65 per share for the three months ended Dec. 31, compared with analysts’ average estimate of $2.58 per share.
Net income rose 12% to $5.8 billion.
Reporting by Niket Nishant in Bengaluru Editing by Vinay Dwivedi
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