Should I Buy Mastercard (MA)? Finance YouTuber Analysis

This creator initiated a long position in Mastercard on June 3rd at 466.57, citing a technical setup where the stock hit their predefined trend reversal zone between the 61.8% Fibonacci retracement at 466 and the 100-level at 424. They believe the long-term correction has ended and expect the stock to continue its upward trend, having already seen a 16% gain since their entry. They anticipate further gains as the stock moves towards its final high.

“Wir stiegen ein bei 46657. Der Markt fahrenzeit tief bei 46452. Punktlandung. Wir nennen sowas ein Touch and Go. Er trifft oben auf, berührt das Ganze, baut sofort die Trendwende aus und explodiert dann regelrecht nach oben.”

This creator intends to realize profits on their Mastercard position when the stock reaches a price range of 660 to 710. They anticipate this will be the final upward movement in the current multi-year cycle, after which they expect a significant correction of approximately 50%.

“Wenn wir hier aber hochkommen in den Bereich um die 660 bis 17, dann werden wir uns definitiv mit Verkäufen beschäftigen, mit Gewinnrealisierungen.”

This creator plans to add to their Mastercard position after the completion of the 'wave 2' correction, which follows the initial 'wave 1' upward movement. They will calculate a new entry zone based on the market's movement to capitalize on the subsequent 'wave 3' rally, aiming to capture an additional 30% gain from this second entry.

“Wenn wir die übergeordnete ein haben, dann haben wir gleichzeitig einen abgeschlossenen Fünfteiler und dann kommen wir in der zwei noch mal runter und genau dort wollen wir dann die Option ziehen, eine weitere Position einzukaufen.”

This creator suggests shorting Mastercard after it reaches its final high (around 660-710) and they have realized profits from their long positions. They anticipate a significant correction of about 50% from that peak, presenting an opportunity to profit from falling prices.

“Hier oben können wir uns gut vorstellen, dass wir den Markt dann auch mit einer finalen Zielzone belegen. Das heißt hier oben sogar nicht nur Gewinne realisieren, sondern den Markt auch zu shorten, denn dann sehen wir hier eine gute Möglichkeit, dass wir hier auf der Short Seite, also von fallenden Kursen zu spekulieren, ungefähr 50% mitnehmen können.”

The analyst bought MasterCard to balance his portfolio with Visa, viewing both as highly profitable businesses currently at relatively cheap valuations. He dismisses the risk of Europe separating from their networks, citing the slow pace of political decisions. This purchase also diversifies his portfolio away from AI exposure.

“I think these are two incredible companies and I think they're selling at relatively cheap valuations and I didn't want to miss the opportunity to add more into my portfolio.”

The analyst believes MasterCard is currently undervalued based on a 10-year discounted free cash flow model, even considering potential industry pressures from account-to-account transactions. He notes its strong profitability and consistent performance, making it an attractive long-term investment.

“I'd love, on a personal basis, to get involved in MasterCard. I think I might take a position in this one in the not-too-distant future.”

The YouTuber is excited about Mastercard, noting it recently dropped below his ideal entry price. While acknowledging potential industry headwinds for payment processors due to evolving technology and banks moving to bank-to-bank transfers, he sees it as a 'real opportunity right now' and plans a deeper dive.

“Just recently, Mastercard has hit has dropped below the ideal entry. Now, this one is one of the ones that I'm most excited about because to me, Mastercard is a real interesting company... at first glance, Mastercard looks like a real opportunity right now.”

The YouTuber identifies Mastercard as a high-quality business currently trading at attractive multiples, even below its COVID crash valuation. They believe the market is ignoring such fundamentally sound companies in favor of speculative assets, creating long-term opportunities for investors focused on valuation and fundamentals.

“You have things like SpaceX going on at the same time as you have things like Mastercard trading for valuation ratios under the COVID crash.”

The YouTuber is buying Mastercard (MA) because it is trading at its lowest price multiples since 2016, despite continued business growth. He addresses concerns about national payment rails (like Pix and UPI) by arguing that credit cards remain essential for international transactions, building credit, and accessing benefits like rewards. He also emphasizes Mastercard's successful pivot to value-added services, which now constitute over 40% of revenue and are growing faster than the core payment network, diversifying its business model.

“Mastercard stock continues to sell off down to its lowest price multiples since 2016. So, Mastercard is now trading for a lower multiple than it was during the COVID crash, during the 2022 sell-off, and literally for a decade low price ratio.”

The YouTuber is increasingly interested in buying Mastercard, viewing its recent underperformance as an opportunity. He highlights its strong fundamentals, including 60% operating margins, 175 billion transactions annually, and consistent growth in cash flows and revenue. The stock is trading at its lowest forward P/E since 2018, making it an attractive value proposition while the market focuses on other sectors.

“And funny enough for myself, I'm actually getting more interested in Mastercard because it has been underperforming while the underlying business is continuing to grow and compound away.”

The YouTuber is buying Mastercard because its stock is in an 18% correction from all-time highs, causing its price multiples to contract to historical lows, despite strong underlying fundamental growth in revenues and EPS. He highlights accelerated growth in value-added services and international markets, and believes the current valuation offers a compelling entry point for long-term compounding.

“The business is seeing strong accelerated growth and its price multiples are now right at the bottom of their range. But now let's dive into more of my research on Mastercard and really why I decided to take a position in the stock here.”

Berkshire Hathaway, under Greg Abel, completely liquidated its position in Mastercard. This action is presented as part of Abel's broader portfolio restructuring, divesting from companies that do not align with his personal investment convictions, despite them being long-held Buffett favorites.

“Quali sono questi nomi? Visa, Mastercard, vendute entrambe al 100%.”

The YouTuber views Mastercard as a highly durable business due to its asset-light model, high gross profit margins (78%), and consistent fee collection on global transactions ($2.7 trillion processed in Q1). They emphasize its lack of credit risk and strong financial performance, including significant share buybacks. While currently trading at 25x free cash flow, they are interested in buying if the price drops to $400, adding it to their watchlist.

“for me, guys, I'm going to hold steady here, but I'm going to add it to my watch list at $400 per share.”

The YouTuber presents Mastercard as another example of a strong dividend growth stock in the same sector as American Express. He points out that its dividend has multiplied sixfold in the last decade, with the stock price following this growth trend, indicating a reliable long-term investment.

“Pero es que Mastercard, que es del mismo sector es exactamente lo mismo. Vemos aquí que en el año 2014, hace 10 años, pagaba apenas unos 050 de dividendo por acción y ahora paga $3 por acción. ha multiplicado por seis veces el dividendo.”

The YouTuber believes Mastercard is a high-quality business with strong fundamentals, including excellent margins, high ROE, and sustainable EPS growth. While acknowledging its current valuation is a bit high compared to historical averages, he suggests it's a good long-term investment. He would prefer to buy if the stock corrects by 10% to get a better entry point.

“Yo ya os digo, creo que no es mal momento para entrar, aunque a mí me gustaría verla con un 10% de descuento y ahí sí que podría entrar más fuerte, pero es solo mi opinión, vosotros tenéis que realizar vuestro propio análisis.”

The YouTuber recommends Mastercard as a safer play, noting it's not a lender and thus avoids consumer credit risk. As a transaction processor, it benefits from increased credit card usage when borrowing becomes cheaper, without exposure to charge-offs or delinquencies. Its 'toll booth' business model provides stability and consistent returns.

“As borrowing gets cheaper, credit card usage increases, and Mastercard is there to skim a small fee off every transaction.”

The YouTuber discusses MasterCard's use of in-house generative AI to boost fraud protection and improve detection by 20%. While acknowledging its consistent returns, they suggest that AI's impact on such a mega-cap stock will only marginally move earnings, making it a less explosive growth opportunity compared to smaller companies.

“the problem with these Mega cap stocks is that even big changes from the AI use cases aren't going to move the needle that much MasterCard will continue to grow Revenue at a low double- digigit pace and grow its earnings incrementally better but likely isn't going to Boom higher like some of these smaller companies like upstart”

The YouTuber views Mastercard as a 'royalty-like' business, similar to Warren Buffett's investments, benefiting from the growth of virtually all other businesses that accept its payments. He believes its business model is incredible and still underappreciated by investors, making it a highly profitable and easy holding.

“Mastercard has been a highly profitable holding and a very easy one to hold. It's had virtually no problems, no challenges along the way. It's a company that has an incredible business model that investors still don't fully appreciate.”

The YouTuber considers Mastercard a 'great company' based on fundamental data, suggesting that long-term investors can simply buy the stock and expect positive returns. He highlights a previous support level at $437 which held well, indicating underlying strength. While he personally took quick profits on a certificate, he acknowledges that holding the stock would have yielded significantly higher returns.

“Ich hatte ja auch hier zum Beispiel immer wieder mal den Chart geteilt zu Mastercard, wo ich ja auch ganz klar sagte, es ist sowieso ein tolles Unternehmen, man muss ja auch nicht mit Zertifikaten traden, man kann nicht auch einfach in die Aktien einsteigen und wird langfristig so oder so freuen, laut den fundamentalen Daten, die ich persönlich sehe.”

The analyst sold his credit card stocks last year due to anticipated disruption from new payment technologies like blockchain and cryptocurrency. While MasterCard is a mature business in a growing industry with good operating leverage and opportunities in B2B payments, the long-term threat of lower-cost, disintermediated transaction rails poses a significant risk that the company may not be able to counter effectively.

“I sold on my credit card socks last year and I wrote about it if you want to go back and look at that one but I see disruption coming I just don't know it disruption's impossible to predict the timing”