Pershing Square Inc. on Visa Inc.
Thesis
Pershing Square believes Visa is an attractively valued, high-quality payments franchise capable of sustaining strong earnings growth through secular payment digitization, cross-border transaction expansion, and value-added services. Visa delivered 12% organic revenue growth and 17% EPS growth in the third quarter, while value-added services revenue grew approximately 27%, significantly faster than its core payments business. The company is positioning itself to participate in stablecoin adoption through a new platform that enables banks and fintech companies to issue and manage stablecoins. Visa is also developing infrastructure for agentic commerce, allowing AI agents to transact securely across its network. Subsequent approval from the People's Bank of China to prepare for domestic operations represents another potential long-term growth opportunity. Pershing Square believes Visa's combination of double-digit revenue growth, strong margins, and mid-to-high-teens EPS growth supports attractive investment returns at its current valuation of approximately 24 times forward earnings.
“Visa and Mastercard trade at 24 times forward earnings, an attractive valuation for businesses of their quality.”
Key risks
- Stablecoins and emerging digital payment infrastructure could disrupt traditional payment network economics if Visa fails to participate successfully.
- Agentic commerce could alter transaction initiation and potentially reduce the importance of conventional card networks.
- A slowdown in payment volumes or cross-border transaction activity could undermine expected revenue growth.
- The company's anticipated expansion into China's domestic payments market may develop more slowly than expected following its initial regulatory approval.