Amazon.com, Inc. (AMZN) could potentially pose a serious threat to financial services firm Mastercard Inc. (MA), should the online retailer aggressively expand its payment operations following its acquisition of Whole Foods Market, Inc. (WFM), according to a Barron's article authored by Sandler O'Neill + Partners. (For more, see also: How can I invest in credit card companies?)
Amazon's Payment Offerings
Currently, Amazon offers a card that is co-branded with JPMorgan Chase & Co. (JPM) and offers another two cards that are issued by Synchrony Bank. Further, the online retail giant gives customers the ability to make payments through their bank accounts, the Barron's article noted. Following its purchase of Whole Foods, Amazon could potentially use its new chain of stores to promote these payment methods, a development that could potentially eat into Mastercard's share of the market.
Improving Financial Guidance
The authors of the Barron's article noted that during its second quarter earnings call, Mastercard left its 2017 non-GAAP guidance—which predicted expenses growing faster that revenue—unchanged.
However, the company increased its target rate for revenue growth on September 7, a development that prompted Guggenheim to upgrade the company's stock, according to a separate Barron's article. (For more, see also: Two Reasons to Own MasterCard in 2017 .)
Mastercard's Strong Performance
The stock has done well since then, rising more than 5%, according to Google Finance. The stock has also done well over the last month and year, rising roughly 9% and 43%, respectively.
Mastercard shares have outperformed the benchmark Standard & Poor's 500 Index, which has climbed roughly 2.3% and 17.5% in the last week and month, additional Google Finance data shows.