Both Visa and Mastercard stocks have broken below their 50 day moving averages. The stocks also have broken below uptrend channelUptrend and downtrend channel patterns are technical analysis tools used to identify potential future price movements. They are formed by two parallel lines on a chart and can be u... support walls.
The next stop for both Visa and Mastercard stocks appears to be support at the 200 day moving averages (red lines).
On March 10, 2023, the trading of Silicon Valley Bank (SVB) shares was suspended, which sparked a wave of selling across the financial industry. Regulators closed down SVB Financial after it was unable to find a buyer and experienced a sharp outflow of client funds. Due to the inverted yield curve and the lower price of longer maturity bonds, the company was unable to sell the amount of bonds needed to raise the money that was needed.
Despite the fact that SVB’s funding base is primarily focused on tech startups, other banks with sizable bond portfolios might experience difficulties if they were required to sell their bonds before they mature in order to raise money.
There seems to be growing concern that, with the inverted yield curve, Visa and Mastercard could be in an SVB type situation if they were ever forced to sell their bonds before maturity in order to raise funds.
Visa and Mastercard issue bonds to finance their operations. Corporate bonds make up one of the most significant components of the U.S. bond market and are considered the world’s largest securities market. Visa and Mastercard use the proceeds from bond salesThe income statement provides a summary of a company's revenue and expenses over a specified period of time, typically a year or a quarter. It shows the company's total revenue, th... for a wide variety of purposes, including financing ongoing mergers and acquisitions, buying new equipment, investing in research and development, buying back their own stock, paying dividends to shareholders, and even refinancing existing debt.
Visa long term debt for the quarter ending December 31, 2022 was $20.487B, a 15.92% increase year-over-year.
Mastercard’s long term debt for 2022 was $13.749B, a 4.88% increase from 2021.