Daniel Shvartsman

Investing.com – Visa (NYSE) shares lost 5% Wednesday despite exceeding estimates in their Q4 fiscal earnings report Tuesday. This is because investors are worried about the prospects for next year.

GAAP earnings at $1.65 a share, and $6.6 Billion, were both higher than analyst expectations. Processing transactions increased 21% in a year while payments rose 17%. Cross-border volume increased 38% last summer, which is indicative of an increase in travel activity. CEO Al Kelly said, “Our performance was driven by the continuation of the recovery in many global economies and the increased diversification of our revenue with new flows and value added services.”

The company’s guidance for their fiscal Q1 is for “high teens,” with expected moderation through the rest of the year as they lap the pandemic spending recovery experienced this year.

Analyst responses included maintaining buy ratings and lowering price targets. Per StreetInsider, Raymond James analyst John Davis said, “while the estimate reset is no doubt frustrating as it likely keeps the stock range bound near-term, it should set the table for the company to beat and raise throughout 2022 as crossborder travel recovers barring any further COVID related hiccups.” RBC analyst Daniel Perlin wrote that, ““FQ4/21 print and guidance suggest that the US consumer continues to rebound, with travel & restaurant spending improving, ecommerce remaining healthy (albeit slightly lower), credit accelerating, with debit remaining relatively stable. Incorporating guidance we are reducing our FY22 estimates.”

The negative effects of a slowing spending growth have knock-on consequences for credit card companies. Mastercard (NYSE) is down more than 6% and Discover Financial Services (NYSE) is down almost 5%. Capital One Financial Corporation (NYSE :), also reporting yesterday, reported a 7% drop in revenue. American Express The exception was (NYSE:), which is down just half of a percentage.