CE 100 Index Adds 0.9% as Visa and Mastercard Lead Payments Names Higher

The CE 100 Index was boosted this past week by the Pay and Be Paid sector. As is always the case as the first few weeks of the year unfold, quarterly results drove investor sentiment and stock prices.

Earnings from Visa and Mastercard were key drivers in the segment, with positive commentary and data on consumer spending. As a result, the pillar was up 2.5%.

Mastercard’s stock gathered 4.8%.

Mastercard’s fourth-quarter earnings results showed that consumers’ gross dollar volumes were up 12% year over year (YoY) to $2.6 trillion. Within that figure, spending on debit cards surged by 10.7%, outpacing the 7.8% gain in credit card spending. The number of cards wielded by consumers and commercial clients across the globe was up 6% to 3.5 billion.

During a conference call with analysts, CEO Michael Miebach said, “The macroeconomic environment continues to perform well, and it is underpinned by healthy consumer spending,” adding, “Consumers remain engaged. Affluent consumers have benefited from the wealth effect, while the mass segment remains supported by the labor market.” 

Elsewhere, Miebach said that during 2024, the company tokenized 4 billion transactions per month, a rate that is 40 times higher than it was six years ago. Commercial flows represent an $80 trillion opportunity for Mastercard, given that only about $3 trillion of that spend takes place on cards, Miebach said on the call. In 2024, commercial debit and credit volumes were 13% of total gross dollar volumes, 11% higher as measured YoY.

Visa, in its own earnings report, detailed that within the U.S., debit volumes were up 8% and credit volumes were 7% higher. Cross-border volumes were 15% higher in constant dollar terms.

CEO Ryan McInerney said on the conference call with analysts that the quarterly volume of about $4 trillion is being driven by the shift to digital payments, which now account for more than 60% of volume.

The company has issued 4.7 billion credentials, which represented 7% growth YoY, and has also issued 12.6 billion tokens, representing a 44% surge YoY.

“If you just look at eCommerce on tokenized transactions,” McInerney said during the call, “we have six percentage point higher approval rates. That [translates into] significantly higher sales for our merchant partners and 30% reduction in fraud rates, which is good for everybody in the ecosystem. … Tokens have become one of our most important platforms for enabling innovation.”

With a nod to the appeal of tap-to-pay functions, the CEO noted that 74% of all face-to-face transactions logged by Visa are contactless, with double-digit growth in markets such as Japan and Argentina. In the U.S., tap-to-pay was up 13 percentage points to 57%.

Visa shares gathered 3.6%

Affirm’s stock was up 9.3%.

As PYMNTS reported, the buy now, pay later (BNPL) giant announced a newly expanded capital partnership (which dates back to 2019) with Liberty Mutual Investments, which the company said will increase consumers’ access to Affirm’s flexible payment options. Through June 2027, LMI will purchase Affirm’s installment loans on a forward flow basis, in amounts up to $750 million outstanding. LMI expects to invest up to $5 billion in the program over time, according to the announcement late last month.

The gains in the payments pillar were offset by a slide in the Bank segment, which fell roughly 3%. The chief contributor to the slide was LendingClub, which saw its shares plummet about 21% in the wake of earnings.

Last week, PYMNTS reported that LendingClub’s latest quarterly results indicated growth across several key metrics, including loan originations and deposits through its digital banking arm and some improved credit metrics. However, in some cases, growth decelerated in the final quarter of the year, and forward-looking guidance sent investors to the sidelines, at least last week. 

Consumer loan originations in the fourth quarter were $1.8 billion, up 13% YoY. That rate is a deceleration from the 23% pace that had been seen in the most recent third-quarter earnings report. Revenues were 17% higher to $217.2 million. Deposits were up 24% YoY to $9.1 billion. In terms of guidance, the firm’s first-quarter projections of loan originations in the range of $1.8 billion to $1.9 billion would represent growth of 12.5% to about 18% YoY.

CFO Drew LaBenne said on the call that marketing expenses will increase, adding that with the first quarter guidance, “We are gaining confidence that the sustained sales price improvements in the marketplace will allow us to open up additional paid marketing channels as we enter the seasonally favorable second and third quarters. We expect to be able to continue growing loan volumes as we move through the year,” and the fourth quarter of the year may see originations about 25% above current levels.   

Pre-provision net revenue guidance for the current quarter of $60 million to $70 million was, as one analyst noted on the call, a bit below consensus of about $73 million. That number would be impacted by increased marketing spend, according to management commentary.

Tesla lost about 1%, and FedEx gave up 3%, as the Move segment slipped 1.4%.

In its most recent earnings report, Tesla reported a 70% decrease in net income compared to the same period in 2023. The firm reported 495,570 cars delivered for Q4 and 1.8 million deliveries for the fiscal year, Tesla’s first annual decline in meeting delivery targets. The company remains adamant that greater affordability will drive mass adoption, but whether it can sustain its margins remains a critical question for investors, PYMNTS reported.

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