Mastercard's good report overshadowed by vague forecast

Mastercard Inc. on Thursday dismissed fears of slower consumer spending growth after a lower-than-expected revenue growth forecast for the last three months of the year overshadowed an upbeat quarter for the U.S. payment system.

The stock price fell 1% after the company said it expected revenue growth of just over 10% — at the lower end of its forecast range — while analysts had expected growth of nearly 15%.

Sachin Mehra, Mastercard's chief financial officer, said consumer spending remains stable given the macroeconomic turmoil, and international travel is starting to slowly pick up.

Investors have been watching closely lately to see how consumers are coping with high inflation and rising interest rates, and at the slightest sign of weakness, stocks are taking a hit.

According to Mehra, this forecast is consistent with the company's past projections.

Low inflation is mostly good for card companies, but the recent cycle of aggressive monetary tightening has taken its toll on consumer spending.

Sanjay Sakhrani, a KBW analyst, said transaction volume was generally in line with trends, but Q4 earnings growth projections were slightly below expectations and consumer spending changed because of inflationary pressures.

During the three months ended Sept. 30, solid travel demand contributed to growth for both Mastercard and its competitors American Express Co. and Visa Inc.

Cross-border payment volume rose 44%. This allowed the company to increase total dollar volume, or the total dollar value of transactions processed on the Mastercard platform, by 11%.

Revenue for the period rose 15% to $5.8 billion and profit was up 4% to $2.5 billion.

The company's earnings were $2.68 per share, net of non-recurring expenses, beating estimates of $2.56, according to Refinitiv.