Mastercard MA-N on Thursday forecast a weaker-than-expected growth in net revenue for the fourth quarter, signaling a potential moderation in spending volumes as an uncertain economic environment prompts caution among consumers.
A low double-digit percentage growth forecast for fourth-quarter net revenue, compared with LSEG estimates of more than 16 per cent growth, sent the New York-based company’s shares down nearly 6 per cent to $365.35, the lowest in nearly four months.
Hawkish signals from the U.S. Federal Reserve, which is expected to raise its benchmark interest rate at least once more before the end of this year, has fueled fears that higher rates could tip the economy into a recession.
“This was a disappointing quarter, in our view, as guidance fell just short of likely elevated expectations,” Edward Jones analyst Logan Purk said.
“While macroeconomic and geopolitical uncertainty remains elevated, our diversified business model positions us well to capitalize on the substantial opportunities in payments and services,” Mastercard CEO Michael Miebach said in a statement.
In the third quarter, resilient spending help Mastercard report a profit ahead of expectations. Excluding one-time costs, it earned $3.39 per share, compared with consensus estimate of $3.21 per share.
Its net revenue rose 14 per cent to $6.5-billion.
Wage growth has so far helped customers persist with their spending habits on travel, shopping and entertainment despite still high inflation, but some analysts said spending trends in October were showing signs of deceleration.
Others, however, expect the Fed to engineer a soft landing, a scenario where growth slows and inflation is brought under control without a recession, boosting consumer sentiment.