Mastercard (MA) Slumps as Cross-Border Volume Plummets

Published October 28, 2020

Mastercard Incorporated (MA) shares fell more than 6% during Wednesday's session after the company reported a 30% decline in cross-border volume on a local basis as part of its third quarter financial results.

Key Takeaways

Mastercard shares fell more than 6% after it reported a 30% decline in cross-border volume on a local basis as part of its third quarter financial results.
Domestic spending has shown signs of improvement, but travel spending remains challenging as the global economy heads toward further lockdowns.
The stock has moved into oversold levels over the past couple of sessions, but the intermediate-term trend remains bearish for the time being.

Third quarter revenue fell 13.7% to $3.84 billion, missing consensus estimates by $110 million, while non-GAAP earnings came in at $1.60 per share, missing consensus estimates by $0.06 per share. Purchase volume came in at $1.24 trillion versus a $1.11 trillion consensus, while gross dollar volume was $1.65 trillion versus a $1.61 trillion consensus.

Chart showing the share price performance of Mastercard Incorporated (MA) — TradingView.com

From a technical standpoint, Mastercard stock broke down from its 200-day moving average at $304.14 during Wednesday's session. The relative strength index (RSI) fell to oversold levels with a reading of 25.52, but the moving average convergence divergence (MACD) remains in a bearish downtrend. These indicators suggest that the stock could see some consolidation before potentially moving lower over the intermediate term.

Consolidation is a technical analysis term referring to security prices oscillating within a corridor and is generally interpreted as market indecisiveness. Said another way, consolidation is used in technical analysis to describe the movement of a stock's price within a well-defined pattern of trading levels.

Traders should watch for consolidation around trendline support near $290.00 over the coming sessions. If the stock breaks down, traders could see a move toward Fibonacci support levels near $270.26. If the stock rebounds, traders could see a move toward trendline resistance at around $325.00.

The Bottom Line

Mastercard shares fell more than 6% during Wednesday's session after the company reported a 30% decline in cross-border volume on a local basis as part of its third quarter financial results. With share prices reaching oversold levels, traders could see some consolidation before the stock resumes its intermediate-term trend lower.

The author holds no position in the stock(s) mentioned except through passively managed index funds.

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