Is Mastercard Stock a Buy Now?

Peter Lynch, a renowned investor, advised investing in familiar companies. Mastercard, a leading payment card brand, exemplifies this principle. However, its popularity raises the question of whether its stock remains a worthwhile investment.

Contrary to common perception, Mastercard doesn`t provide credit. It operates as an "open loop" payment processor, generating revenue by facilitating transactions within its network. Financial institutions, like Citigroup, issue cards and provide credit, while Mastercard acts as an intermediary, earning a small percentage from each transaction.

This business model yields high profit margins for Mastercard. In the second quarter, its net revenue reached $7 billion, with a net income of $3.3 billion, resulting in a remarkable 50% margin. These figures demonstrate Mastercard`s impressive growth, with revenue increasing by 11% and net income by 15% year-over-year. The following sections delve into Mastercard`s market approach and future growth potential.