Business News

Mastercard forecasts weaker revenue growth on economic slowdown fears

SOURCE: REUTERS   Oct 26 (Reuters) - Mastercard MA.N on Thursday forecast a weaker-than-expected growth in net revenue for the fourth quarter, signaling a potential moderation in spending volumes as an uncertain economic environment prompts caution among consumers. Hawkish signals from the U.S. Federal Reserve, which is expected...

by
SOURCE: REUTERS

 

Oct 26 (Reuters) – Mastercard MA.N on Thursday forecast a weaker-than-expected growth in net revenue for the fourth quarter, signaling a potential moderation in spending volumes as an uncertain economic environment prompts caution among consumers.

Hawkish signals from the U.S. Federal Reserve, which is expected to raise its benchmark interest rate at least once more before the end of this year, has fueled fears that higher rates could tip the economy into a recession.

Shares of the Purchase, New York-based company fell 3.7% after Mastercard forecast percentage growth in fourth-quarter net revenue at the low end of low double digits, compared with LSEG estimates of more than 16% growth.

STRONG SHOWING IN Q3

“While macroeconomic and geopolitical uncertainty remains elevated, our diversified business model positions us well,” CEO Michael Miebach said in a statement.

In the third quarter, resilient spending help Mastercard report a profit ahead of expectations. Excluding one-time costs, it earned $3.39 per share, compared with consensus estimate of $3.21 per share.

Wage growth has so far helped customers persist with their spending habits on travel, shopping and entertainment despite still high inflation.

Some analysts expect the Fed to engineer a soft landing, a scenario where growth slows and inflation is brought under control without a recession, helping sentiment further.

Mastercard’s gross dollar volumes, a metric that represents the total dollar value of all transactions processed, rose 11% to $2.3 trillion on a local currency basis from a year earlier.

Net revenue rose 14% to $6.5 billion.

 

(Reporting by Niket Nishant in Bengaluru; Editing by Shinjini Ganguli)