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Stocksak: Mastercard’s dim future clouds profit beat on travel demand


© Stocksak. FILE PHOTO – A Mastercard logo can be seen on this credit card illustration from August 30, 2017. REUTERS/Thomas White

By Niket Naishant and Manya Sainsi

(Stocksak). Mastercard Inc (NYSE) on Thursday dismissed concerns of a slowdown of consumer spending following a weaker-than expected forecast for revenue growth for three months. This overshadowed a positive quarter by the U.S. card company.

Shares fell 1% after the company stated that it expects revenue growth in the “low double digits” portion of its forecast range. Analysts were expecting a near 15% rise.

Sachin Mehra, Chief Financial Officer at Mastercard, stated that consumers’ spending is resilient despite macroeconomic headwinds. He also said that cross-border travel continues its recovery.

Investors have been monitoring how consumers deal with stubbornly high inflation, rising interest rates, and punishing stocks when there is any sign of weakness.

Mehra said that the forecast was in line with company’s previous expectations.

Card issuers tend to be benefited by mild inflation, but recent cycles of aggressive monetary tightening have impacted discretionary spending.

“Volume trends were generally in line but the 4Q outlook on revenue growth was a bit below expectations,” Sanjay Sakhrani, KBW analyst, said. He added that inflationary pressures had caused consumer spending to shift.

Mastercard, along with its peers, has enjoyed strong travel demand. American Express Co (NYSE: Visa Inc (NYSE:) During the three months ending Sept. 30.

Cross-border volumes were up 44%, which is an indicator of cardholders’ spending beyond the country they issued. This resulted in an increase of gross dollar volumes, which is the dollar value for all transactions processed on Mastercard’s platform by 11%.

Reported revenue increased 15% to $5.8billion, while profit rose 4% up to $2.5billion.

Refinitiv data shows that the company earned $2.68 per shares, surpassing the $2.56 estimate.

Graphic: Spending volumes at U.S. card firms grow, but pace moderates – https://graphics.reuters.com/MASTERCARD-RESULTS/znvnbdxrgvl/chart.png

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