Visa (V) Stock: Why Investors Sold Off After Solid Earnings Beat

TLDR

• Visa reported Q1 fiscal 2026 adjusted earnings of $3.17 per share and revenue of $10.9 billion, beating analyst expectations of $3.14 per share and $10.39 billion
• Payment volumes grew 8%, cross-border volumes increased 12%, and processed transactions rose 9% during the quarter ended December 31
• Strong holiday season spending and resilient consumer activity drove the earnings beat, particularly among higher-income households
• Visa shares fell 1.9% despite the beat, down 5.4% year-to-date compared to the S&P 500’s 1.4% gain
• Company projects low double-digit net revenue growth for Q2 and full-year fiscal 2026

Visa posted solid first-quarter results that topped Wall Street estimates. But investors weren’t impressed.

The payment processor reported adjusted earnings of $3.17 per share for its fiscal first quarter ended December 31. That beat analyst expectations of $3.14 per share.

Revenue came in at $10.9 billion. Analysts had expected $10.69 billion.

Both figures marked a 15% increase from the same quarter last year. The beat was driven by robust consumer spending during the holiday season.

Payment volumes jumped 8% during the quarter. Cross-border volumes grew 12%.

Processed transactions increased 9%. These metrics show consumers kept swiping their cards despite economic uncertainty.

CEO Ryan McInerney credited the “very strong” quarter to resilient customer spending. He also highlighted strength in value-added services and commercial solutions.

Higher-income households led the spending surge. The holiday season saw record shoppers and a spike in online sales.

Lower and middle-income consumers had less wiggle room. President Trump’s tariffs raised prices, limiting their ability to make discretionary purchases.

Market Reaction and Future Outlook

Visa shares dropped 1.9% on Thursday afternoon despite the earnings beat. The stock is down 5.4% year-to-date.

That compares poorly to the S&P 500’s 1.4% gain over the same period. Visa is also down 3.3% over the past 12 months.

Analysts at Evercore ISI suggested the stock selloff came from higher operating expense guidance. They also pointed to some weakness in cross-border trends.

Cross-border volumes grew at a slightly slower pace of 12% compared to previous quarters. These metrics serve as a real-time proxy for global trade and travel.

Analysts watch these numbers closely following Trump’s “Liberation Day” tariff announcements. Visa’s CFO Chris Suh said the company hasn’t seen a meaningful tariff impact yet.

For the second fiscal quarter ending in March, Visa expects net revenue growth in the low double digits. Operating expenses are projected to grow in the mid-teens.

Earnings per share growth is expected at the high end of low double digits. For full-year fiscal 2026, the company projects low double-digit growth across net revenue, operating expenses, and earnings per share.

Recent Developments

Visa is working to integrate stablecoins into its payment systems. The company sees this as an opportunity to maintain market leadership as digital tokens gain traction.

A Visa executive said the stablecoin opportunity is “additive” to current operations. The company launched a pilot program in December allowing some U.S. banks to settle transactions using Circle’s USDC stablecoin.

Visa and Mastercard face pressure from Trump’s call for a 10% cap on credit card interest rates. That’s half the current average U.S. credit card rate of 19.65%.

Some analysts told Barron’s the impact might not be as severe as initially feared. Peer Mastercard also reported strong quarterly results on Thursday.

On November 10, Visa and Mastercard agreed to lower merchant credit card fees by a tenth of a percentage point for five years. The settlement resolves a 2005 lawsuit alleging anticompetitive behavior.

The court still needs to approve the settlement. Visa’s board declared a quarterly cash dividend of 67 cents per share of class A common stock.

The dividend is payable on March 2 to shareholders of record as of February 10. Analysts at Seaport Research Partners noted Visa “tends to guide conservatively” and has shown consistent ability to outperform expectations.

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