Mastercard Inc lowered its three-week-old forecast for quarterly revenue growth as the spreading coronavirus curbs international travel and even takes a bite out of e-commerce, a business executives had hoped would be immune.<\/p>\n
The credit-card network said it\u2019s knocking 2 to 3 percentage points off the prediction it made on an earnings conference call Jan. 29. That translates to growth of 9% to 10% on a currency-neutral basis, excluding acquisitions, it said Monday.<\/p>\n
Shares of Mastercard and Visa Inc. dropped in after-hours trading.<\/p>\n
\u201cCross-border travel, and to a lesser extent cross-border e-commerce growth, is being impacted,\u201d Mastercard said in a statement.<\/p>\n
\u201cThere are many unknowns as to the duration and severity of the situation and we are closely monitoring it.\u201d<\/p>\n
The short-lived forecast underscores how quickly the virus is altering consumer behavior as it moves beyond China. Mastercard executives had previously taken comfort in the fact that much of the firm\u2019s business into and out of China is e-commerce, which could potentially continue amid measures to contain the disease.<\/p>\n
\u201cIt provides some level of a hedge,\u201d Chief Financial Officer Sachin Mehra had told analysts on Jan. 29. But even back then, chief executive officer Ajay Banga quickly cautioned that the firm would \u201ctake a look at those numbers once again\u201d if the crisis worsened and affected more parts of the globe.<\/p>\n
On Monday, United Airlines Holdings Inc withdrew its 2020 profit forecast, also citing the virus.<\/p>\n
Mastercard\u2019s shares fell 4.4% during regular trading Monday after a spike in infections in countries including South Korea and Italy triggered a global selloff. The stock then dropped an additional 1.1% after hours at 6:30 p.m. in New York. Visa fell 1.7%.<\/p>\n
If the impact of the virus is limited to the first quarter, annual net revenue growth will probably be at the low end of the low-teens range, Mastercard said on Monday, noting that it plans to give further updates on its next earnings call.<\/p>\n
Visa CEO Al Kelly told investors at his company\u2019s investor day Feb. 11 that it was \u201ctoo early to tell\u201d what impact the virus might have on results.<\/p>\n
\u201cBut if planes are not flying in and out of China, if hotels are not being filled – which they\u2019re not at the moment – and if the supply chains are being impacted – which I suspect they are — there is going to be some impact,\u201d Kelly said.<\/p>\n