Visa Investors Ignoring The Potential For Lost Business To New Stablecoin Networks

Summary Visa faces a serious disruptive threat from major customers Amazon and Walmart developing in-house blockchain-based payment solutions for vendors and retail customers. If credit card transaction fees are forced into decline to retain clients, Visa’s high profit margins and valuation premium could evaporate, risking a -50% or greater stock price drawdown. The GENIUS Act and government stablecoin regulation (guidelines for the industry) could accelerate the shift away from traditional credit cards, especially if new non-bank entrants market lower processing fees nationally. Given an extreme overvaluation position and looming competition, I am issuing a Sell rating for Visa, expecting a significant selloff once federal stablecoin regulations become law. A major disruption to credit card processors could be coming later in 2025, especially for the Visa Inc. ( V ) business model. It’s a disruption that could send revenue and profits into reverse, really for the first time since this company began public trading in March 2008. The news on Friday (June 13th, 2025) that the largest U.S. retailers Amazon ( AMZN ) and Walmart ( WMT ) are working individually on their own internal payment systems using the novel blockchain stablecoin idea is absolutely an existential threat to Visa [alongside Mastercard ( MA ), plus a number of others in the credit card processing field]. For starters, trading and global transfer payment value in stablecoins has become extraordinary in dollar terms already. According to NFT Evening , A pivotal highlight from 2024 was the extraordinary $27.6 trillion in total stablecoin transfer volume, which surpassed the combined transaction volumes of Visa and Mastercard. This monumental shift underscores blockchain’s increasing adoption for global payments. This momentum persisted into Q1 2025, with stablecoin transaction volume again outperforming Visa, and Ethereum’s Layer-1 recording a high of $480 billion in stablecoin volume in May 2025. Since Visa is the largest credit card processor in the world at 39% of all transactions (and 61% of dollar charges in America during 2024), this company has the most to lose if new stablecoin payment solutions are the future of money exchanges. Capital One Shopping Research – 2024 Statistics, May 2025 Article While Visa has and should play a role transferring funds between new stablecoin and cryptocurrency creations as a form of money , as the business is finding customers demanding a variety of settling and purchasing options , the possible invention of new networks that bypass the need for a third-party processor are the glaring problem. In essence, Amazon and Walmart could set up their own money exchanging networks for related ecosystem merchants and retail customers (becoming their own bank, currency creator, transaction processor and retailing operation to the masses in combination). Why are new stablecoin networks a threat? What if the two retailers offer automatic 3% or 4% discounts on all purchases for holding money insider their stablecoin domains, vs. no discount when using a regular credit card as a form of payment (retail customers on average get between 1% to 2% as a bank-card reward back). Won’t millions of customers jump on board? Stablecoin issuers can collect interest off the float of coins in circulation (invested in Treasuries), while an internal payment network completely eliminates credit card charge fees. The profit incentive for Walmart and Amazon is they can control discounts to consumers and earn interest for themselves (off other people’s money) in the end vs. today’s traditional payment fee structure (a cost for doing business, generally 1% to 3% of dollar amounts charged to merchants). At the very least, expanding payment processing competition from the likes of PayPal ( PYPL ), that collects/earns income for its owners both from transactions and cash held in Venmo accounts (while it is leading the way with its own stablecoin development), could dent super-high profit margins at Visa. As a consequence for investors, if credit card transaction fees are soon forced to materially backtrack for the company to retain business, Visa will no longer have a “moat” or sufficient barrier to prevent customers/businesses from leaving its payment network. Then, we may witness a stock overvaluation slide back to earth vs. other financial businesses. Effectively, new stablecoin-based transaction networks could prove the disrupting invention Visa shareholders believed would never be possible as a direct threat to its near-monopoly position in the banking world. Herein lies the investment rub. A sector-normalized valuation could be 50% lower than the first half of 2025 level, and that’s on flat Visa operating results. Given operating performance like total profits and all-important margins turn lower, a stock price drop greater than -50% could be in the cards through 2026. Don’t say such cannot happen. When new competition shows up with a better way forward at reduced cost for customers (merchants and retail consumers in this case), that’s typically what happens for the loser in the equation on Wall Street. I have mentioned Visa as an overvalued pick to avoid over the past year or two. Today, I am officially putting a Sell rating on the stock, a move based on this week’s stablecoin development news. Once U.S. stablecoin regulations are finalized and passed through the GENIUS Act , perhaps in the weeks ahead, I expect a major selloff in Visa shares will follow. Overvaluation Problem Visa shares are in no way ready for heightened and rapidly exploding competition for payment processing. If both Amazon and Walmart create their own payment systems, it won’t be hard for them to expand/market their networks to millions of small businesses (at Amazon) or tens of millions of customers (at Walmart). In other words, passage of the GENIUS Act could quickly lead to a drop in regular bank credit card usage later in 2025 at Visa and Mastercard, especially for online transactions. So, the changing rationale goes, Visa shareholders may be forced to face a normalized to even lower than industry-normal business valuation level if sales and earnings begin to decline by early 2026. That’s a long distance from the current overvaluation setup. Seeking Alpha’s Quant Factor Valuation Grade is an overall “F” score today. The summary valuation story is, the stock is holding on to the same extreme valuation of the past five years, while it stands at 100%, 200% and greater premiums to regular financial sector levels. Seeking Alpha Table – Visa, Quant Valuation Grades, June 13th, 2025, Author Reference My bearish argument is that Visa (and Mastercard for that matter) should trade closer to the valuation levels of PayPal in the near future, if basic credit card transaction numbers peak in 2025-2026. Below are some graphs comparing/contrasting the problem for V shareholders going forward. On core enterprise valuations (including stock capitalization and company debt) for EBITDA and sales, there exists enormous downside for Visa’s (and Mastercard’s) share quote, assuming stablecoin networks are the future of money changing hands over the internet. YCharts – Visa vs. MA & PYPL, EV to Forward EBITDA Est., Since 2023 YCharts – Visa vs. MA & PYPL, EV to Forward Sales Est., Since 2023 Given steady credit card processing growth rates stall or move into reverse, and profit margins tank back toward competitive levels for the processing industry, why would Visa continue to trade at massive premiums on fundamental financial ratios? The current overvaluation setup leaves no room for error. Incredible share valuation premiums for Visa (and Mastercard) are completely a function of wildly excessive profit margins. Again, a profit margin hit would be the first sign of serious trouble for the business model, assuming stablecoin payment networks become popular in rapid fashion. YCharts – Visa vs. MA & PYPL, Gross Profit Margins, Since 2023 YCharts – Visa vs. MA & PYPL, Final Profit Margins, Since 2023 For sure, if operating business growth rates for sales fall to +5% annually or worse starting in 2026, a trailing P/E ratio of 31x (estimated by the end of 2025) is way too expensive at Visa. An S&P 500 blue-chip P/E average closer to 25x and financial sector norms in the 12x to 15x range could mean considerable investor pain is approaching. At this point, I do not trust overly optimistic analyst projections, beyond the next couple of quarters. Seeking Alpha Table – Visa, Analyst Estimates for 2025-27, Made June 13th, 2025 Stock Trading Warning Signs I will say at face value, most of the technical momentum indicators underpinning stock trading health look positive today. However, there are several signs of potential trouble that have appeared since April. The first technical trading problem is found in the 13-day Force Index calculation. A multi-year extreme for selling intensity was reached in April, while Friday’s selloff may have started a plunge to even lower levels next week (both instances circled in red). The second and more obvious bearish warning to me flashed with the new “record low” reading in the 14-day Ease of Movement indicator, reached in April (circled in gold below). Trump’s trade war panic selloff for Wall Street generally proved Visa is not immune to changing macroeconomic conditions. StockCharts.com – Visa, 12 Months of Daily Price & Volume Changes, Author References I have mentioned in many articles over the past year how weak EMV calculations are a symptom of sellers overwhelming buyers on unusually light trading volume. Low EMV numbers often (but not always) predate larger selling waves and far lower stock pricing. Honestly, the last time EMV reached a record low was the early part of 2022, which followed abnormal selling pressure as measured by the Force Index in late 2021. The rest of 2022 proved problematic for Visa shareholders. Could 2025 bring more of the same, namely a material downturn in share pricing? 2021-22 Trading Similarities StockCharts.com – Visa, Daily Price & Volume, June 2021 to October 2022, Author References Final Thoughts My trading readout is the continuation of selling next week, particularly on Monday-Tuesday (further depressing Ease of Movement and Force Index readings), would be a truly bearish outcome. Such would highlight the stablecoin news flow is worthy of your attention. In my view, PayPal is developing a much sounder business model for the payment/banking future. I own a small PYPL position and discussed the long-term positives taking place for this business in my article during February here . Old-school payment processors, keeping high transaction fees as their main revenue source (from vendors and retailers), could soon find themselves losing business and slashing their fee structure. To remain a viable option for retailers and businesses discovering cheaper alternatives through stablecoin networks, profits would undoubtedly take a major hit. At the very least, Visa and Mastercard may have to develop their own stablecoin-based networks to compete, which will require far lower selling price points per transaction and reduced profit margins in the new-age banking landscape about to open up. Company insiders have been selling stock over the past 12 months, with ZERO insider buys reported to the SEC over the last three months. I don’t know if they feel the company is overvalued vs. a slowing economy, or worries about stablecoin impacts are starting to appear, but management is in no hurry to increase their Visa share positioning. Nasdaq.com – Visa, Insider Transactions, 12 Months What if stablecoin networks at America’s largest retailing organizations do not dent Visa transaction volume growth dramatically? Sure, this is one possibility. And, it’s possible consumers will not stray away from traditional banking options for a number of years, until online networks and blockchain technologies are proven safe and effective by other users first. Yet, Visa’s share price future may still suffer from an overvaluation hangover. If the U.S. and global economy are headed for recession in 2025-26, transaction volumes at payment processors will suffer (all other variables remaining the same). I do not believe June’s all-time price high for V is properly discounting this outcome either. Why invest in the potential of a flat-lining operating business during the second half of 2025 (on economic recession, a likely result of Trump tariffs and fading confidence in the U.S. dollar), with rising probabilities for backsliding results in 2026 on the arrival of cheaper stablecoin options for businesses/consumers to transfer money? To me, the upside in Visa is quite limited from the nosebleed valuation level of today. It’s priced as if nothing can go wrong for the operating business, while the future could be laden with a number of obstacles difficult to overcome. I rate shares an Avoid if you are searching for sound risk-adjusted places to put investment capital to work, and a Sell if you own shares. The stablecoin-competition catalyst to exit a position is no laughing matter. Visa’s near duopoly protected business model (alongside Mastercard) could face escalating competitive threats, as new digital-money exchanging inventions mushroom. Thanks for reading. Please consider this article a first step in your due diligence process. Consulting with a registered and experienced investment advisor is recommended before making any trade.

Source: Seeking Alpha