Update: The Visa IPO begins trading under the ticker symbol V tomorrow and is expected to price between 37 – 42 tonight.
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The Visa IPO took another step towards success today after the SEC gave its restructuring plan the go ahead. Now the company will seek approval from member financial institutions which would pave the way for an IPO early next year. The restructuring involves Visa International, Visa USA and Visa Canada becoming subsidiaries of a single company. Visa Europe will remain a membership association and will become a licensee of, and own a minority interest in, Visa Inc.
If the success of the Mastercard (MA) IPO is any indication, the IPO of Visa which is the world’s largest credit card company (they have 60% share of the market) will be tremendously successful as well. Going public will allow the company to streamline operations, invest in new payment technologies and help insulate member banks from legal damages brought about by antitrust litigation from merchants.
The biggest beneficiaries when Visa goes public will be the dozens of banks that make up its membership, including major U.S. financial institutions like Bank of America (BAC) Wells Fargo (WFC) and JPMorgan (JPM). They stand to reap hundreds of millions of dollars in capital gains if they sell part of their stakes. After MasterCard (MA) completed its initial public offering, Citigroup (C) and JPMorgan (JPM) cashed out of their holdings and walked way with one-time gains worth more than $100 million.
This will no doubt be one of the biggest IPO’s in history so it will be interesting to watch it move when it does go public.
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This will be a huge IPO, that will be even bigger now because of that success that MA has enjoyed already. Everyone will want in right away and the investment banks that bring it public will be loving it. This has been waited on for years, and when it gets here it will be a hot IPO.
The Visa IPO will open big and then sink like a stone under the weight of MA competition. Good luck longs. . . you’ll need it for sure.
Most merchants in the USA that accept Visa/MC receive almost twice as many Visa cards than MasterCards. MasterCard has always & will always lag far behind Visa in processing volume. In fact, American Express is now gaining ground on MasterCard. MasterCard is a 2nd rate company.
Steve,
I would think it would perform similarly to mastercard, if not better. In 2000 MC opened at 39 and ended last friday at 193…? nearly a five-fold increase. I should expect the same sort of results from this IPO. Why would it be any different?
Phillip, the economy isn’t limited to the United States. Open up your horizon a little bit, then examine exactly what it is that Visa and MasterCard actually do. Without really checking into it, you might mistakenly think that their business models are identical. I won’t go into the differences here, but it would be a mistake to base your entire decision about a company on one single metric (such as US transaction volume).
good point stevecrozz –
Also, the size of a company has absolutely zero, zilch to do with stock performance or the growth rate of a company although one thing I do like about Visa is that it appears they are putting the litigation behind them. I believe Mastercard has quite a few pending lawsuits/settlements in the pipeline. As far as American Express, they are for more of a financial conglomerate so not a great comparison. It is important to point out that the growth in these companies as is the case for most companies in the US, is coming from overseas. Should be interesting to see these two behemoths battle in the marketplace! There is so much demand building for the Visa IPO that I tend to agree with Steven that Visa will drop significantly after the first few days of trading if not immediately. That would be the time to load up because it would most likely be temporary.
In response to:
“Most merchants in the USA that accept Visa/MC receive almost twice as many Visa cards than MasterCards. MasterCard has always & will always lag far behind Visa in processing volume. In fact, American Express is now gaining ground on MasterCard. MasterCard is a 2nd rate company.”
Not sure where you got your stats from but while Visa does process more transactions, it is not twice as many, and MA recently surpassed Visa in terms of # of cards issued. It is not unreasonable to think that MA will pull ahead in the next year or two.
Also, if you look at how Visa is structered, you have to assume that there is a ton of inefficencies since Visa is seperated into 3 companies that never talk to each other – you have a fraud team in each company, a customer service group in each country, a T & E dept in each country – none of which talk to each other or help each other out. I wouldn’t be surprised if Visa lays off a bunch of people soon.
You can not compare AE to MA as they have a completely different business model and are not structered the same -besides the fact that they are both credit card brands, there are very few simularities.
So are normal people like myself going to be able to get in on the IPO or will we have to wait 2 months after the IPO is released to buy stock? I know Google did some kind of crazy Auction style thing which made it difficult to get on board initially. Thoughts?
Hi,
I am new to investing. How do i subscribe to IPO’s? I currently trade using Zecco.
Thanks
Kartiq
There’s too much hype on VISA IPO which people should be cautious about. I don’t think VISA IPO will be nearly as a good prospect as MA IPO for the following reasons:
1). How a stock of a company grows doesn’t depends on how big the company is or how big market share it has – indeed, VISA in terms of volume is dominant ( over 70% in authorization traffic, over 80% in SMS(ATM) traffic). However, stocks only reflect the growth in the future – the bigger the market it has, the smaller the growth it has – unless it expands its businesses horizontally, which I’m sure VISA will after it goes public and has freedom to do so – but that it wont have any edge on any new product lines.
2). The performance of MA IPO has given a new hype to VISA IPO, so a lot more of people will jump in and initial price will be very high, that leaves smaller room for growth. If the hype is reason, VISA IPO will still be good but not nearly good as MA IPO ; but if the hype is too much, the result could be negative.
my 2 cents..
couldn’t have said it better myself Cosmo – there is huge demand for this IPO and I could see it reversing sharply following the first few hours of trading then lumbering sideways for a year. If I had a buck for every time someone emailed me about how to get in on this IPO ..
also just want to clarify that there’s a difference between “a successful IPO” and “a good stock to invest in”. No doubt, VISA IPO will one of the biggest IPOs in the history, and it will be successful in the sense that the member banks will walk away with hundreds of millions after they sell their shares to the public, but does it that mean it’s a hot stock to buy after the 1st day of IPO?
Remember the simple rule: when someone wins, there’s always someone else who loses – member banks walk away with the big cash, who’s paying for them?
Look at BX which started on the IPO day at $45 with a lot of promise and is at $23. Too much hype will result in a negative trend. Watch and act …
I have also seen that the top Beneficiares for Visa(IPO) are Bank of America, Wells Fargo & JPMorgan, and aside from Wells fargo, the other 2 are DEEPLY involved with the SUBPRIME MESS!!! That makes me very very cautious as they too will add to the excitment of this IPO to raise enormous amounts of profit and then take a one time cash out profit JUST LIKE CITICORP (AKA:CITIGROUP) AND JPMORGAM DID WITH Mastercard, the 0ne time profit was over 100 million dollars, and JPMorgan is in this Visa IPO too!!! That may hurt investers in the early stages. All I can say is do your homework on this IPO before throwing money into it. They too have a few lawsuits pending. Good-luck to all with this venture.
When Mastercard IPO came out and these institutions cashed out their millions of dollars the share price dropped max $2 dollars and rebounded after a week. It is better for the performance of the stock if some of these institutions let go of their large inventories of stock especially because most likely international institutions will be buying large quantities as soon as it is available to the public. International corporations can also own up to 20% of American companies and China Merchant Bank seems very interested. I agree that there may be some overbuying but it will not have any affect on short term investors I think everyone should try to pick up as much as they can get because the effects of all the overbuying will not hurt the share price for atleast a couple of years.
I am interested in the VISA IPO, please keep me informed. I am an action direct account holder. TKS
Let’s not forget, when MA came out, P/E was 11. V will be around 30. So, most of the excitement is priced in. I doubt this will ever double. However, if it does 25%, i’ll be happy in this environment. I subscribed to this IPO, just FYI.
Could someone please advise the number of times the mastercard Ipo was oversubscribed ?
thanks in advance
How do we subscribe to Visa IPO?
Hello,
I am interested in Visa stock. When is a good time to purchase once it opens next week.