Visa and Yahoo! Market Valuation
In a sure vote of confidence and a brave undertaking amid the lingering subprime crisis, Visa raised $17.9 billion late Tuesday to complete the largest initial public offering in US history.
The world’s largest processor of credit and debit cards sold 406 million shares at $44 apiece to easily eclipse the previous U.S. record IPO of $10.6 billion set by AT&T Wireless eight years ago.
Visa shares, trading on under the "V" ticker symbol, are scheduled to begin trading Wednesday on the New York Stock Exchange. The San Francisco-based company will debut with a market value of about $36 billion.
The money is expected to help banks strengthen their balance sheets as they write off billions of dollars in loans that have soured amid the worst housing slump since the 1930s.
Unlike lenders who have issued nearly 1.5 billion cards bearing its brand, Visa doesn’t carry any consumer debt on its books. The company makes its money from processing fees, which have been steadily rising for years, including the past two U.S. recessions in 1991 and 2001.
Visa processed 44 billion transactions totaling $3.2 trillion in 2006, according to the Nilson Report, an industry newsletter. MasterCard handled 23.4 billion transactions totaling $1.9 trillion in the same year.
Compare Visa’s market valuation of $36B with Yahoo’s $44.6B original market valuation by Microsoft. Though this is an apple to orange comparison, Visa is more of a sure bet than Yahoo!. Visa seems to be insulated from any US recession or any downturn for that matter.