This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Visa IPO Charges Ahead

Updated from 3:12 p.m. EDT

V is Victory -- or Visa (V - Get Report).

Shares of the San Francisco-based credit card payments processor, trading under the "V" symbol on the New York Stock Exchange, surged well into the double digits on its first day of trading Wednesday. The stock opened at $59.50 a share -- 35% above where shares were initially priced, according to Bloomberg. Shares ranged from $55 to as high as $69 a share throughout the day. The stock closed at $56.50.

Nearly 177 million shares of Visa traded hands on Wednesday.

Cramer: How to Make Money Off Visa IPO

"This is an exciting and historic day for Visa," said Visa's Chairman and CEO Joseph Saunders. "It marks the culmination of a more than two-year process that led to our global reorganization and our becoming a public company.

"We believe Visa's new structure positions us to meet the changing needs of our merchant and financial institution clients around the world as we seek to enhance and grow the products and services we provide to our customers," Saunders continued. "We operate in a large global market undergoing a significant shift from cash and check to electronic payments. We believe Visa is well positioned to build upon our past success and take advantage of this migration to electronic payments."

Late Tuesday, Visa priced 406 million of Class A shares at $44 a share, above the expected range of $37 to $42 a share. Visa expects net proceeds from the offering -- after deducting underwriting discounts and commissions and estimated offering expenses -- to be approximately $17.3 billion, it said on Wednesday.

Large IPOs typically don't spike in share price like Visa did on Wednesday, observers say. Investors may have taken a break from the dire news coming out of the financial sector to take advantage of the positive outlook for Visa. The company doesn't assume credit card loan risk onto its balance sheet, but instead makes money from transactions processed. Visa is also relatively shielded from a downturn in the U.S. economy. It has a large debit card network in which many purchases are "nondiscretionary," such as gas and groceries as well as other necessary items.

"The underwriters could have maybe sold it higher, but probably because of the weak market they erred on the side of caution and priced it to make sure that they're clients who got in on the IPO made money today," says Nicolas Einhorn, an analyst at Renaissance Capital, which runs the website "They could have sold it to clients at $60 but then it would have traded flat or down on the first day."

Many commercial banks will also receive a windfall from the IPO by selling their ownerships stakes in the company.

Others may have bought the stock after seeing MasterCard's (MA - Get Report) successful offering in 2006. MasterCard's stock rose 17% on its first day of trading from its offer price of $39 a share. The stock has risen more than 400% since then.

"It's certainly enough to take your breath away to see a stock price above the range in a market that is so schizophrenic [and] a deal of 406 million shares on top of that," says David Menlow, president of IPO Financial Network. "It's refreshing to see it, I don't fault anybody to say that they underpriced the offering, but the trap is people think this sounds the all clear for IPOs in general. This is a singular event that doesn't have very much bearing on the current state of the IPO market."
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AXP $65.43 0.00%
COF $72.39 0.00%
DFS $56.27 0.00%
GOOG $693.01 0.00%
MA $96.99 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs