In my first installment of Unboxed, I delved into the world of meme trading and later tried my hand at profiting off stocks touted on Reddit’s WallStreetBets forum.
If you haven’t had a chance to watch those videos, I’ll give you a quick summary: It didn’t go well. I found that following the momentum of crowds isn’t a winning strategy and that trading options is hard.
(Remember: Any profits from those trades will be donated to the nonprofit Dow Jones News Fund.)
Even though I’m taking a pause from trading, I’m still paying close attention to stocks—particularly the ones that my Barron’s colleagues and I have analyzed. So, in light of the holiday season, I joined up with fellow reporter Jacob Sonenshine to take a look at Mastercard (ticker: MA), a company that touches all aspects of the consumer experience.
Sonenshine highlighted Mastercard back in October. At the time, he was bullish on the return of prepandemic, cross-border transaction revenue volumes. Data from July showed that cross-border transactions level stood at 79% of July 2019 volumes, which impliedroom for near-term upside as the economy reopens and travel activity returns to normal.
Of course, that theory is being tested as Covid-19 cases surge due to the Omicron variant, which emerged last month. With cases rising throughout the world, new restrictions are being put in place and some households are rethinking their holiday travel plans. Yet despite current fears, there are reasons to believe that cross-border transactions will rebound.
Data released earlier this weekshowed that holiday travel volumes were at 85% of the levels seen during the holiday season in 2019. Then on Wednesday, a read on consumer confidence showed that customers were feeling more optimistic in the early part of December than they were in November. It’s worth noting, though, that the consumer confidence data was collected just as the Omicron variant became the predominant Covid strain in the U.S.
But there’s more to Mastercard than transaction volumes returning to prepandemic levels. The company is also a dominant player in the payments space—and is taking on upstart companies by launching its own “Buy Now, Pay Later,” or BNPL, offering. U.S.-based BNPL volume is expected to exceed $100 billion by 2024, up from $3 billion in 2019, according to Mercator Advisory Group.