Visa stock price has struggled in the past few months as investors worry that it may become disrupted by the ongoing stablecoin growth. V shares were trading at $350 on Thursday, down by 6.75% from its highest point this year.
Are stablecoins a threat to Visa?
The main reason why the Visa stock price has wavered is that analysts believe that its business model could be impacted by the ongoing stablecoin growth.
Indeed, data compiled by Visa shows that the total transaction volume of stablecoins over the last 12 months exceeded $36.1 trillion. The adjusted figure jumped to over $7.4 trillion, while the number of active unique addresses rose to 274.3 million.
For a long time, most of these stablecoin transactions was in the blockchain ecosystem, including platforms like centralized and decentralized exchanges.
This could be changing as the transactions move mainstream, especially with the passage of the GENIUS Act. This act will introduce new rules that all stablecoin issuers must follow, including regular disclosures and the mandatory assets they must hold.
Read more: Stablecoins gain momentum, but retail payment disruption remains distant
Many large retailers, such as Walmart and Amazon, have begun integrating stablecoins into their operations. Stablecoins would be beneficial to these companies because they would help them avoid the high transaction cost that Visa and Mastercard charge.
The transaction cost ranges between 1.5% and 3.5%, which is a significant percentage, especially for a company handling billions of dollars annually.
Stablecoins are much cheaper, with the average transaction cost being negligible. Transactions are also completed instantly.
A stablecoin would also help companies like Walmart and Amazon to generate revenue by letting them invest customer deposits.
It is still too early to determine whether these stablecoins will ultimately disrupt Visa’s business. However, historically, it is common for investors to amplify concerns about disruption. For example, Netflix’s stock crashed a few years ago amid fears of disruption from companies like Apple and Warner Bros as they launched their streaming solutions. Netflix has thrived since then.
Visa earnings ahead
The next important catalyst for the Visa stock price is its upcoming earnings, which will provide more color about its growth. Wall Street analysts expect the results to show that the average revenue estimate for the quarter will be $9.8 billion, up by 10.3% from the same period last year.
Visa’s earnings per share will likely be $2.83, up from $2.42 a year earlier. These are strong numbers for a company that has been in business for decades.
Analysts expect that the annual results will be $39 billion, up by 10% YoY followed by $43 billion next year.
The most recent results showed that Visa’s revenue rose by 9% to $9.6 billion, while its transaction volume will be much higher.
Visa stock price analysis
V stock chart | Source: TradingView
The daily chart shows that the Visa share price has moved sideways in the past few months. It is consolidating alongside the 50-day and 100-day Exponential Moving Averages (EMA).
Most notably, it has formed an inverse head-and-shoulders pattern, one of the most common bullish reversal patterns. Therefore, the stock will likely bounce back in the coming months. If this happens, the next point to watch will be at $400.
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