Connect with us

Visa or Square: Which Stock is a More Compelling Fintech Play?

The pandemic has triggered rapid adoption of cashless payments and digital transactions by consumers and merchants as well. In a survey conducted by PayPal in August, 70% of small business
Read More…
The post Visa or Square: Which Stock is a More Compel

Published

on

The pandemic has triggered rapid adoption of cashless payments and digital transactions by consumers and merchants as well. In a survey conducted by PayPal in August, 70% of small business respondents said that they are ready to invest in new technology to expand digital payments, with 73% of respondents indicating that digital payments are the “new normal.”

Rising e-commerce sales are benefiting payment processing companies like PayPal, Square, Mastercard and Visa. However, a plunge in travel and entertainment spending due to COVID-19 is hurting Mastercard and Visa. Bearing these trends in mind, we used the TipRanks Stock Comparison tool to see how Visa and Square stack up against each other.

Visa (V)

Even amid a challenging macro environment, the total transactions processed by global payments leader Visa increased 2% to $140.8 billion in FY20 (ended Sept. 30). However, the company’s 4Q FY20 and full-year revenue declined due to lower cross-border transactions owing to the pandemic. 

Visa’s 4Q revenue declined 17% year-over-year to $5.1 billion due to lower cross-border transactions, partially offset by an increase in processed transactions. Adjusted EPS fell 23% to $1.12 in 4Q. Thanks to the uncertain macro environment, the company did not issue any guidance for FY21. However, it anticipates revenue to decline in the first half of FY21 and rebound significantly in the second half, with the highest growth in the fourth quarter.

Meanwhile, Visa is taking several initiatives to leverage the surging adoption of digital transactions. It is seeing huge growth prospects in B2B, which represents a $120 trillion volume opportunity. On the card-based B2B front, Visa is trying to address the increased interest for digital payments, including virtual cards.

To capture the evolving transaction needs, Visa launched the Tap to Phone payment option in over 15 international markets and plans to roll out the facility in the US in 2021. Tap to Phone enables businesses to accept contactless payments on any NFC (Near Field Communication)-enabled Android device with no requirement for additional hardware.

Recently, Visa acquired YellowPepper, a fintech with proprietary technology and partnerships supporting leading financial institutions and startups in Latin America and the Caribbean. The company believes that this acquisition accelerates the adoption of its ‘network of networks’ strategy, to become a single point of access for initiating multiple transaction types and ensuring the secure movement of money.  (See V stock analysis on TipRanks)

Meanwhile, Visa’s planned acquisition of fintech Plaid (announced in January 2020) ran into trouble as the DOJ filed a lawsuit against the company due to antitrust concerns. In a statement Visa said, “Visa strongly disagrees with the Department of Justice (DOJ), whose attempt to block Visa’s acquisition of Plaid is legally flawed and contradicted by the facts.”

Last month, Wells Fargo analyst Donald Fandetti lowered his price target on Visa to $210 from $230 but maintained a Buy rating. The analyst highlighted the "solid" quarter given the current environment, but noted that the results were a reminder that networks face earnings risk as cross-border travel is still down significantly. Fandetti expects some volatility as COVID-19 cases increase, but believes that Visa’s long-term growth story remains intact and stated that he is a buyer through the weakness in Visa shares.

With shares rising 11.6% year-to-date, the average price target of $222.88 implies an upside potential of 6.3% in the months ahead. Visa scores a Strong Buy analyst consensus that breaks down into 15 Buys and 4 Holds.

Square (SQ)

Payments facilitator Square has been a key beneficiary of the pandemic. It is one of the best-performing stocks this year and has risen 224.5% so fare. Earlier this month, Square crushed analysts’ estimates with its stellar 3Q performance. Revenue surged 140% year-over-year to $3.03 billion, and adjusted EPS increased 36% to $0.34.  The company’s 3Q results were primarily driven by strength in its Cash App. Square’s overall GPV or Gross Payment Volume (indicates total payments processed) in 3Q grew 12.4% to $31.7 billion.

Square has two ecosystems - Seller (includes B2C payment solutions and other services offered to sellers) and Cash App (enables peer-to-peer payments and includes other features as well like stock trading and bitcoin). In 3Q, the Seller GPV rose 4% to $28.8 billion, marking a rebound after experiencing the impact of lockdown restrictions in 2Q.

Meanwhile, Cash App GPV exploded 332% year-over-year to $2.9 billion, driven by higher customer engagement. The number of average daily transacting active Cash App customers nearly doubled year-over-year. Also, Cash App gross profit jumped 212% year-over-year to $385 million. (See SQ stock analysis on TipRanks)

The company sees a huge opportunity to grow its Seller and CashApp platforms in the US and international markets. For this purpose, Square has accelerated its go-to-market investments and expects nearly one-third of its total marketing budget this year to be dedicated to awareness marketing.

It is also upgrading its two ecosystems to drive customer engagement. In 3Q, the company introduced two new features for Square Payroll—Instant Payments and On-Demand Pay. Instant Payments allows Square Payroll merchants to pay employees using earned funds the next business day with direct deposit or instantly when employees use Cash App. On-Demand Pay enables employees to receive their compensation faster by transferring up to $200 of earned wages per pay period into their Cash App accounts. The new features will be helpful in integrating the Seller and Cash App ecosystems.

Wells Fargo analyst Timothy Willi increased the price target on Square to $200 from $175 and maintained a Buy rating in a reaction to the 3Q results. The analyst stated that while the company’s revenue in the Seller business was a bit below his estimate, the Cash App business continues to see strong momentum, which he thinks will continue to help power the story and investor sentiment as Square aggressively pursues a very sizable market for consumer financial products.

The Street has a cautiously optimistic outlook on Square, with a Moderate Buy analyst consensus based on 18 Buys, 8 Holds and 3 Sells. With shares rising significantly this year, the average price target of $192.12 reflects a possible downside of 5.3% over the coming year.

Conclusion

The boom in digital payments is expected to continue post-pandemic, thus benefiting companies like Visa and Square. Visa is a well-established player with an extensive network and is expected to bounce back once travel resumes and cross-border transactions pick up. Coming to dividends, Visa recently hiked its quarterly dividend by 6.7% to $0.32 per share and has a modest dividend yield of 0.63%. In comparison, Square does not pay any dividends.

Additionally, Square stock has already soared this year and the Street doesn’t see further upside. To summarize, a lower valuation and upside potential in the stock make Visa a better fintech pick than Square.   

To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.

Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment

The post Visa or Square: Which Stock is a More Compelling Fintech Play? appeared first on TipRanks Financial Blog.

Read More

Continue Reading

International

Beloved mall retailer files Chapter 7 bankruptcy, will liquidate

The struggling chain has given up the fight and will close hundreds of stores around the world.

Published

on

It has been a brutal period for several popular retailers. The fallout from the covid pandemic and a challenging economic environment have pushed numerous chains into bankruptcy with Tuesday Morning, Christmas Tree Shops, and Bed Bath & Beyond all moving from Chapter 11 to Chapter 7 bankruptcy liquidation.

In all three of those cases, the companies faced clear financial pressures that led to inventory problems and vendors demanding faster, or even upfront payment. That creates a sort of inevitability.

Related: Beloved retailer finds life after bankruptcy, new famous owner

When a retailer faces financial pressure it sets off a cycle where vendors become wary of selling them items. That leads to barren shelves and no ability for the chain to sell its way out of its financial problems. 

Once that happens bankruptcy generally becomes the only option. Sometimes that means a Chapter 11 filing which gives the company a chance to negotiate with its creditors. In some cases, deals can be worked out where vendors extend longer terms or even forgive some debts, and banks offer an extension of loan terms.

In other cases, new funding can be secured which assuages vendor concerns or the company might be taken over by its vendors. Sometimes, as was the case with David's Bridal, a new owner steps in, adds new money, and makes deals with creditors in order to give the company a new lease on life.

It's rare that a retailer moves directly into Chapter 7 bankruptcy and decides to liquidate without trying to find a new source of funding.

Mall traffic has varied depending upon the type of mall.

Image source: Getty Images

The Body Shop has bad news for customers  

The Body Shop has been in a very public fight for survival. Fears began when the company closed half of its locations in the United Kingdom. That was followed by a bankruptcy-style filing in Canada and an abrupt closure of its U.S. stores on March 4.

"The Canadian subsidiary of the global beauty and cosmetics brand announced it has started restructuring proceedings by filing a Notice of Intention (NOI) to Make a Proposal pursuant to the Bankruptcy and Insolvency Act (Canada). In the same release, the company said that, as of March 1, 2024, The Body Shop US Limited has ceased operations," Chain Store Age reported.

A message on the company's U.S. website shared a simple message that does not appear to be the entire story.

"We're currently undergoing planned maintenance, but don't worry we're due to be back online soon."

That same message is still on the company's website, but a new filing makes it clear that the site is not down for maintenance, it's down for good.

The Body Shop files for Chapter 7 bankruptcy

While the future appeared bleak for The Body Shop, fans of the brand held out hope that a savior would step in. That's not going to be the case. 

The Body Shop filed for Chapter 7 bankruptcy in the United States.

"The US arm of the ethical cosmetics group has ceased trading at its 50 outlets. On Saturday (March 9), it filed for Chapter 7 insolvency, under which assets are sold off to clear debts, putting about 400 jobs at risk including those in a distribution center that still holds millions of dollars worth of stock," The Guardian reported.

After its closure in the United States, the survival of the brand remains very much in doubt. About half of the chain's stores in the United Kingdom remain open along with its Australian stores. 

The future of those stores remains very much in doubt and the chain has shared that it needs new funding in order for them to continue operating.

The Body Shop did not respond to a request for comment from TheStreet.   

Read More

Continue Reading

Government

Are Voters Recoiling Against Disorder?

Are Voters Recoiling Against Disorder?

Authored by Michael Barone via The Epoch Times (emphasis ours),

The headlines coming out of the Super…

Published

on

Are Voters Recoiling Against Disorder?

Authored by Michael Barone via The Epoch Times (emphasis ours),

The headlines coming out of the Super Tuesday primaries have got it right. Barring cataclysmic changes, Donald Trump and Joe Biden will be the Republican and Democratic nominees for president in 2024.

(Left) President Joe Biden delivers remarks on canceling student debt at Culver City Julian Dixon Library in Culver City, Calif., on Feb. 21, 2024. (Right) Republican presidential candidate and former U.S. President Donald Trump stands on stage during a campaign event at Big League Dreams Las Vegas in Las Vegas, Nev., on Jan. 27, 2024. (Mario Tama/Getty Images; David Becker/Getty Images)

With Nikki Haley’s withdrawal, there will be no more significantly contested primaries or caucuses—the earliest both parties’ races have been over since something like the current primary-dominated system was put in place in 1972.

The primary results have spotlighted some of both nominees’ weaknesses.

Donald Trump lost high-income, high-educated constituencies, including the entire metro area—aka the Swamp. Many but by no means all Haley votes there were cast by Biden Democrats. Mr. Trump can’t afford to lose too many of the others in target states like Pennsylvania and Michigan.

Majorities and large minorities of voters in overwhelmingly Latino counties in Texas’s Rio Grande Valley and some in Houston voted against Joe Biden, and even more against Senate nominee Rep. Colin Allred (D-Texas).

Returns from Hispanic precincts in New Hampshire and Massachusetts show the same thing. Mr. Biden can’t afford to lose too many Latino votes in target states like Arizona and Georgia.

When Mr. Trump rode down that escalator in 2015, commentators assumed he’d repel Latinos. Instead, Latino voters nationally, and especially the closest eyewitnesses of Biden’s open-border policy, have been trending heavily Republican.

High-income liberal Democrats may sport lawn signs proclaiming, “In this house, we believe ... no human is illegal.” The logical consequence of that belief is an open border. But modest-income folks in border counties know that flows of illegal immigrants result in disorder, disease, and crime.

There is plenty of impatience with increased disorder in election returns below the presidential level. Consider Los Angeles County, America’s largest county, with nearly 10 million people, more people than 40 of the 50 states. It voted 71 percent for Mr. Biden in 2020.

Current returns show county District Attorney George Gascon winning only 21 percent of the vote in the nonpartisan primary. He’ll apparently face Republican Nathan Hochman, a critic of his liberal policies, in November.

Gascon, elected after the May 2020 death of counterfeit-passing suspect George Floyd in Minneapolis, is one of many county prosecutors supported by billionaire George Soros. His policies include not charging juveniles as adults, not seeking higher penalties for gang membership or use of firearms, and bringing fewer misdemeanor cases.

The predictable result has been increased car thefts, burglaries, and personal robberies. Some 120 assistant district attorneys have left the office, and there’s a backlog of 10,000 unprosecuted cases.

More than a dozen other Soros-backed and similarly liberal prosecutors have faced strong opposition or have left office.

St. Louis prosecutor Kim Gardner resigned last May amid lawsuits seeking her removal, Milwaukee’s John Chisholm retired in January, and Baltimore’s Marilyn Mosby was defeated in July 2022 and convicted of perjury in September 2023. Last November, Loudoun County, Virginia, voters (62 percent Biden) ousted liberal Buta Biberaj, who declined to prosecute a transgender student for assault, and in June 2022 voters in San Francisco (85 percent Biden) recalled famed radical Chesa Boudin.

Similarly, this Tuesday, voters in San Francisco passed ballot measures strengthening police powers and requiring treatment of drug-addicted welfare recipients.

In retrospect, it appears the Floyd video, appearing after three months of COVID-19 confinement, sparked a frenzied, even crazed reaction, especially among the highly educated and articulate. One fatal incident was seen as proof that America’s “systemic racism” was worse than ever and that police forces should be defunded and perhaps abolished.

2020 was “the year America went crazy,” I wrote in January 2021, a year in which police funding was actually cut by Democrats in New York, Los Angeles, San Francisco, Seattle, and Denver. A year in which young New York Times (NYT) staffers claimed they were endangered by the publication of Sen. Tom Cotton’s (R-Ark.) opinion article advocating calling in military forces if necessary to stop rioting, as had been done in Detroit in 1967 and Los Angeles in 1992. A craven NYT publisher even fired the editorial page editor for running the article.

Evidence of visible and tangible discontent with increasing violence and its consequences—barren and locked shelves in Manhattan chain drugstores, skyrocketing carjackings in Washington, D.C.—is as unmistakable in polls and election results as it is in daily life in large metropolitan areas. Maybe 2024 will turn out to be the year even liberal America stopped acting crazy.

Chaos and disorder work against incumbents, as they did in 1968 when Democrats saw their party’s popular vote fall from 61 percent to 43 percent.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Tyler Durden Sat, 03/09/2024 - 23:20

Read More

Continue Reading

Government

Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The…

Published

on

Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The U.S. Department of Veterans Affairs (VA) reviewed no data when deciding in 2023 to keep its COVID-19 vaccine mandate in place.

Doses of a COVID-19 vaccine in Washington in a file image. (Jacquelyn Martin/Pool/AFP via Getty Images)

VA Secretary Denis McDonough said on May 1, 2023, that the end of many other federal mandates “will not impact current policies at the Department of Veterans Affairs.”

He said the mandate was remaining for VA health care personnel “to ensure the safety of veterans and our colleagues.”

Mr. McDonough did not cite any studies or other data. A VA spokesperson declined to provide any data that was reviewed when deciding not to rescind the mandate. The Epoch Times submitted a Freedom of Information Act for “all documents outlining which data was relied upon when establishing the mandate when deciding to keep the mandate in place.”

The agency searched for such data and did not find any.

The VA does not even attempt to justify its policies with science, because it can’t,” Leslie Manookian, president and founder of the Health Freedom Defense Fund, told The Epoch Times.

“The VA just trusts that the process and cost of challenging its unfounded policies is so onerous, most people are dissuaded from even trying,” she added.

The VA’s mandate remains in place to this day.

The VA’s website claims that vaccines “help protect you from getting severe illness” and “offer good protection against most COVID-19 variants,” pointing in part to observational data from the U.S. Centers for Disease Control and Prevention (CDC) that estimate the vaccines provide poor protection against symptomatic infection and transient shielding against hospitalization.

There have also been increasing concerns among outside scientists about confirmed side effects like heart inflammation—the VA hid a safety signal it detected for the inflammation—and possible side effects such as tinnitus, which shift the benefit-risk calculus.

President Joe Biden imposed a slate of COVID-19 vaccine mandates in 2021. The VA was the first federal agency to implement a mandate.

President Biden rescinded the mandates in May 2023, citing a drop in COVID-19 cases and hospitalizations. His administration maintains the choice to require vaccines was the right one and saved lives.

“Our administration’s vaccination requirements helped ensure the safety of workers in critical workforces including those in the healthcare and education sectors, protecting themselves and the populations they serve, and strengthening their ability to provide services without disruptions to operations,” the White House said.

Some experts said requiring vaccination meant many younger people were forced to get a vaccine despite the risks potentially outweighing the benefits, leaving fewer doses for older adults.

By mandating the vaccines to younger people and those with natural immunity from having had COVID, older people in the U.S. and other countries did not have access to them, and many people might have died because of that,” Martin Kulldorff, a professor of medicine on leave from Harvard Medical School, told The Epoch Times previously.

The VA was one of just a handful of agencies to keep its mandate in place following the removal of many federal mandates.

“At this time, the vaccine requirement will remain in effect for VA health care personnel, including VA psychologists, pharmacists, social workers, nursing assistants, physical therapists, respiratory therapists, peer specialists, medical support assistants, engineers, housekeepers, and other clinical, administrative, and infrastructure support employees,” Mr. McDonough wrote to VA employees at the time.

This also includes VA volunteers and contractors. Effectively, this means that any Veterans Health Administration (VHA) employee, volunteer, or contractor who works in VHA facilities, visits VHA facilities, or provides direct care to those we serve will still be subject to the vaccine requirement at this time,” he said. “We continue to monitor and discuss this requirement, and we will provide more information about the vaccination requirements for VA health care employees soon. As always, we will process requests for vaccination exceptions in accordance with applicable laws, regulations, and policies.”

The version of the shots cleared in the fall of 2022, and available through the fall of 2023, did not have any clinical trial data supporting them.

A new version was approved in the fall of 2023 because there were indications that the shots not only offered temporary protection but also that the level of protection was lower than what was observed during earlier stages of the pandemic.

Ms. Manookian, whose group has challenged several of the federal mandates, said that the mandate “illustrates the dangers of the administrative state and how these federal agencies have become a law unto themselves.”

Tyler Durden Sat, 03/09/2024 - 22:10

Read More

Continue Reading

Trending