Can investors get exposure to the promising but volatile world of cryptocurrency and blockchain technology via a blue chip, mega cap company? As unlikely as it sounds, shares of Visa (NYSE:V) could offer prospective investors just that.
The $490 billion global payments technology company is synonymous with its credit card offerings and payment processing network, but Visa has recently made forays into the world of cryptocurrency, as it keeps an eye on the future. (See Visa stock charts on TipRanks)
While Visa recently grabbed headlines with its purchase of a Cryptopunk NFT (non-fungible token), there is more going on underneath the hood. Visa purchased the NFT for 49.5 ETH (ETH-USD) (approximately $150,000 at time of purchase). It pointed to the fact that due to the increased interest and demand in the space, the company wants to help its “clients and partners participate.” Furthermore, it said that participating in this transaction equips Visa with “a firsthand understanding of the infrastructure requirements for a global brand to purchase, store and leverage an NFT.”
Jarrod Dicker of the Chernin Group told CNBC, “For the first time in a long time, we have an entirely new internet-native business model…for a company like Visa coming in really trying to focus on the future of commerce and transactions, it makes absolute sense for them to start playing around and socializing the notion that this could be a new way to transact, this is the new way of commerce.”
For its part, Visa’s head of blockchain technology stated, “We think NFTs will play an important role in the future of retail, social media, entertainment, and commerce.”
Crypto-Linked Credit and Debit Cards
Beyond NFTs, Visa has been working to partner with dozens of crypto platforms to offer crypto-linked credit cards, and reports that in the first half of 2021, over $1 billion has been spent using those cards. Visa has also developed a transaction settlement via USDC (the US dollar stablecoin) and partnered with Circle, the company behind USDC. Furthermore, Visa invested in the Series B round of Anchorage, a company building security infrastructure for digital currency.
While revenues derived from cryptocurrency and blockchain technology are obviously not a huge part of Visa’s overall revenue mix today, it is good to see that it isn't resting on its laurels as a current leader in global payments.
Visa is investing to make sure that it will still be a market leader in the future. It isn't satisfied to be the payments version of the horse and buggy company that gets disrupted when the automobile comes around.
Performance and Analyst Ratings
Shares of Visa are also down about 10% from their 52-week high, and offer a dividend, albeit a small one. Visa is rated a Strong Buy by analysts, with 19 out of 20 analysts covering the stock giving it a Buy rating over the past 3 months. The average Visa price target is $280.75, about 21% above today’s prices.
Core Business
Outside of crypto, Visa’s core business has also been registering plenty of wins over the past few months, whether it was beginning a new co-brand relationship with MercadoLibre (NASDAQ:MELI), Indian payments giant Paytm issuing a virtual Visa debit card, or Google Pay (NASDAQ:GOOGL) rolling out a virtual Visa card.
Visa will also benefit as lucrative cross-border payment volume continues to normalize, as global travel restrictions caused by COVID continue to ease. Visa reports that outbound travel in most parts of the world has returned to pre-COVID levels.
Takeaway
Overall, Visa is a sensible way to get some exposure to crypto and emerging blockchain technology, while investing in a blue chip company that is firing on all cylinders in its core business.
Disclosure: At the time of publication, Michael Byrne did not have a position in any of the securities mentioned in this article.
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