Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche


Is Visa (V) a Value Investment in Cryptocurrency?

Strangely, the world’s largest credit and debit card brand, Visa (V) could be a value investment in cryptocurrency.

Visa Inc. (NYSE: V) now offers Visa Crypto APIs. An application programming interface (API) is a set of tools, definitions, and protocols for integrating application software and services. APIs allow apps, platforms, and software to communicate and work together.

For example, Visa Crypto APIs allow websites and apps to process cryptocurrency transactions. For example, a Visa Crypto API could allow an e-commerce site to accept Bitcoin (BTC) payments.

Are the Visa Crypto APIs for Real?

Bitcoin is the only cryptocurrency they mention at Visa’s API website. However, the website also mentions digital currencies. Hence, I imagine Visa Crypto APIs could someday process stablecoins such as Tether (USDT) and popular cryptos such as Binance (BNB) and Ethereum (ETH).

They mention no products or projects that use the Visa Crypto APIs. However, Visa is asking merchants and developers to submit projects to use Visa Crypto APIs.

My guess is that Visa’s management wants to have some control and influence over the growing crypto market. The value of cryptocurrencies is enormous and growing.

CoinMarketCap estimates the Total Market Cap for all cryptocurrencies was $2.313 trillion on 7 October 2021. In addition, the 24-Hour Market Volume for all cryptocurrencies was $92.710 billion on 7 October 2021. The Visa executives hope to cash in as more and ordinary people spend cryptocurrency for games and products.

I don’t think Visa’s executives view crypto as a threat to their company, but they could see it as an opportunity. In particular, crypto could help Visa enter developing markets and compete with growing payments solutions such as PayPal (NASDAQ: PYPL) and Square (SQ).

Will Visa Take Cryptocurrencies Mainstream?

I think Visa (V) could help cryptocurrencies go mainstream with its gigantic payments platform.

For example, Visa is the world’s largest issuer of debit cards. Statista estimates there were 1.749 billion Visa debit cards outside the United States and 687 billion Visa debit cards in the United States in the fourth quarter of 2020.

Theoretically, the Visa Crypto APIs could give cryptocurrency platforms access to 2.436 billion debit cards worldwide. Moreover, the Visa Crypto APIs could give blockchain platforms access to one of the world’s largest payment platforms.

Visa claims its payment platform gives users access to 3.6 billion cards, over 70 million merchants, and 15,200 financial institutions in over 200 countries. The Visa Fact Sheet claims Visa’s platform has processed over 206 billion payments transactions.

Hence, Visa Crypto APIs could theoretically give a cryptocurrency platform access to over 70 million merchants and 3.6 billion credit and debit cards around the globe.

Visa is a Value Investment

I consider Visa (NYSE: V) a value investment with or without cryptocurrency.

Notably, Visa makes enormous amounts of money. For example, Visa reported a quarterly gross profit of $4.642 billion and a quarterly operating income of $4.064 billion on 30 June 2021. Moreover, Facebook reported quarterly revenues of $4.837 billion on 30 June 2021.

Visa is a growing company. Visa’s quarterly revenues grew from $4.837 billion on 30 June 2020 to $6.13 billion on 30 June 2021. However, Visa’s quarterly revenues fell from $6.034 billion on 31 December 2019.

Stockrow estimates Visa’s revenues grew by 26.73% in the quarter ending on 30 June 2021. Conversely, Stockrow estimates Visa suffered four quarters of negative revenue growth during the pandemic. For instance, Visa’s revenues fell by 17.17% in the quarter ending on 30 June 2020 and 2.14% in the quarter ending on 31 March 2021.

Thus, I think Visa is a growing Fintech company. Visa has successfully monetized one popular payments technology credit and debit cards. Now Visa is experimenting with another payments technology cryptocurrency. Hence, Visa could make cryptocurrencies as lucrative and as widespread as credit and debit cards.

How Cash Does Visa Generate?

Visa (V) generates enormous amounts of cash. It reported a quarterly operating cash flow of $4.414 billion and a quarterly ending cash flow of $1.716 billion on 30 June 2021.

Visa reported a quarterly ending cash flow of $18.055 billion on 31 December 2020. Interestingly, Visa reported a quarterly financing cash flow of -$5.572 billion on 31 December 2020.

Thus, Visa took in enormous amounts of cash and paid off enormous of debt during the pandemic. Visa still pays off an enormous amount of debt. It reported a quarterly financing cash flow of -$2.846 billion on 30 June 2020.

Visa’s total debts fell from $24.64 billion on 30 September 2020 to $20.996 billion on 30 June 2021. In contrast, Visa’s cash and short-term investments rose from $17.914 billion on 30 June 2020 to $20.259 billion on 30 June 2021. The cash and short-term investments grew to $21.073 billion on 30 September 2020.

Visa is a cash-rich company that pays its debts. Hence, I consider a value investment.

What Value Does Visa (V) have?

Visa Inc. (V) offers enormous value. Visa had $82.671 billion in total assets on 30 June 2021. The total assets grew from $80.919 billion on 30 June 2020.

I think Mr. Market priced Visa (V) fairly at $230.55 on 7 October 2021. Visa also offers a growing share price. Mr. Market paid $200.45 for Visa on 6 October 2020.

Visa offers cash, a growing business, and a growing share price. I think Visa is a value investment with a high margin of safety.

In addition, Visa also offers a nice dividend. Visa shares paid a 32₵ quarterly dividend on 12 August 2021. The quarterly dividend grew from 30₵ on 13 August 2020. They have scheduled two more quarterly Visa dividends of 32₵ for 1 December 2021 and 1 March 2022.

Visa shares offered a forward dividend of $1.28 and a forward yield 0.57% on 7 October 2021. Hence, I consider Visa an excellent dividend stock.

If you are looking for a Fintech value investment that could grow with the rise of cryptocurrency. Visa (NYSE: V) is worth a look. I think this payments technology giant has many years of growth ahead of it.