Pershing Square Inc. on Mastercard Incorporated
Thesis
Pershing Square believes Mastercard offers durable long-term earnings growth supported by global electronic payment adoption, international transaction growth, and the expansion of higher-value financial services. Mastercard delivered 14% organic revenue growth and 21% EPS growth during the quarter, supported by high-single-digit payment volume growth and double-digit cross-border transaction growth. Its value-added services business expanded approximately 19%, creating an additional growth engine beyond the traditional payment network. The fund views stablecoins and autonomous AI commerce as opportunities rather than existential threats, with Mastercard strengthening its position through stablecoin infrastructure initiatives and the acquisition of BVNK. Mastercard's technology and network capabilities should allow it to facilitate secure payments as AI agents increasingly conduct transactions. At approximately 24 times forward earnings, Pershing Square considers the stock attractively valued given its anticipated multi-year double-digit revenue growth and mid-to-high-teens EPS growth.
“Visa and Mastercard trade at 24 times forward earnings, an attractive valuation for businesses of their quality.”
Key risks
- Stablecoin-based payment systems could challenge traditional card network economics if Mastercard fails to capture the associated infrastructure opportunity.
- Agentic commerce could change the way consumers and businesses initiate transactions, potentially weakening the role of existing payment intermediaries.
- Slower payment volume or cross-border transaction growth could reduce the company's ability to sustain double-digit revenue expansion.
- The expansion of value-added services and newly acquired stablecoin infrastructure may not generate the anticipated growth and profitability.