Alibaba and Mastercard Team Up To Offer New Perks for US Business Owners
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Sep 06 2024
0mins
Should l Buy MA?
Source: Benzinga
New Credit Card Launch: Alibaba.com has partnered with Mastercard and Cardless to introduce the Alibaba.com Business Edge Credit Card, aimed at small business owners in the U.S., offering rewards like 3% cashback or 60-day interest-free payment terms on purchases made through the platform.
Financial Performance and Challenges: Despite a 4% year-on-year revenue growth to $33.47 billion, Alibaba missed analyst expectations and faces ongoing challenges from regulatory crackdowns, economic weakness, and competition in the domestic e-commerce market.
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Analyst Views on MA
Wall Street analysts forecast MA stock price to rise
28 Analyst Rating
25 Buy
3 Hold
0 Sell
Strong Buy
Current: 527.460
Low
500.00
Averages
660.00
High
739.00
Current: 527.460
Low
500.00
Averages
660.00
High
739.00
About MA
Mastercard Incorporated is a technology company in the global payments industry. The Company connects consumers, financial institutions, merchants, governments, digital partners, businesses and other organizations worldwide by enabling electronic payments and making those payment transactions secure, simple, smart and accessible. It provides a range of payment solutions and services using its brands, including Mastercard, Maestro and Cirrus. It operates a payments network that provides choice and flexibility for consumers, merchants and its customers. Through its proprietary global payments network, it switches (authorizes, clears and settles) payment transactions. Its additional payments capabilities include automated clearing house (ACH) transactions (both batch and real-time account-based payments). It offers security solutions, consumer acquisition and engagement, business and market insights, gateway, processing and open banking, among other services and solutions.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Indirect Stock Holdings: By owning shares of Berkshire, investors can indirectly hold positions in five other stocks, including Apple, Alphabet (Google's parent), Amazon, Chevron, and Mastercard, thereby achieving broader market exposure.
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- Political Pressure Intensifies: Amid persistent inflation, Trump and Sanders have found common ground in seeking to lower credit card annual percentage rates, with Trump proposing a 10% cap and Sanders advocating for a permanent 15% cap, potentially reshaping the profitability of credit card companies.
- Cautious Industry Response: Major credit card issuers like Capital One are in a holding pattern amidst political rhetoric, fearing that if a cap is implemented, they will be compelled to cut credit lines, adversely affecting credit access for lower-income households.
- Profitability at Risk: Analysts predict that a long-term rate cap could reduce Capital One's earnings per share by 25% or wipe them out entirely, as credit card operations account for approximately 74% of its total revenue, primarily derived from interest on customer balances.
- Acquisition Impact Significant: Capital One's $35 billion acquisition of Discover last year will be affected by any interest rate limits, as Discover's credit card balances will also be impacted, further diminishing Capital One's competitive edge, especially without a robust payment network.
See More
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See More
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- Importance of Economic Moats: Long-term investors should focus on companies with durable competitive advantages, known as 'economic moats,' such as high switching costs and barriers to entry, which collectively foster long-term business success.
- Complexity of Platform Business Models: Unlike linear business models, platform business models are more complex as they connect buyers and sellers, and as their user bases grow, the value of their products and services increases, enhancing user retention and reducing competitive risks.
- Network Effects in Payments Industry: American Express connects 160 million merchants with 153 million active cards through its closed-loop system, showcasing strong network effects, while Visa and Mastercard each have billions of cards in circulation globally, further solidifying their market positions.
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See More
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- Credit Card Rate Cap: The proposal for a 10% cap on credit card interest rates led to a decline in financial stocks in January, and while large banks have begun to recover in February, pure credit card stocks remain below pre-announcement levels, reflecting market uncertainty regarding the policy.
- Medicare Payment Rates: The administration's plan to limit increases in Medicare payment rates aims to combat alleged fraud by insurers, and while the industry has not reacted aggressively, concerns about the policy's implications linger in the market.
- Future Policy Risks: Investors are anxious about Trump's potential future moves, particularly in housing, healthcare, and energy sectors, with analysts noting that these areas could be adversely affected by policy changes, thereby increasing market uncertainty.
See More
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- Legislative Support for Digital Euro: The European Parliament has given significant backing to the digital euro, endorsing the European Central Bank's negotiating stance, indicating that the 2029 launch goal hinges on legislative approval, reflecting a commitment to monetary sovereignty.
- Diverse Functionality: This support emphasizes the need for the digital euro to function both online and offline, aiming to reduce reliance on non-European payment providers and enhance the EU's competitiveness in the digital economy.
- Market Integration Demand: The amendments approved by the Parliament call for equal access to the digital euro, highlighting its importance in bolstering EU monetary sovereignty and deepening the single market while reducing fragmentation in retail payments.
- Crypto Asset Regulation: The Parliament also urged the ECB to enhance monitoring of crypto assets, warning that if digital payments are left to private and non-EU providers, it risks creating new forms of exclusion for users and merchants, underscoring the importance of regulation.
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