Finicity is a data aggregator that help companies make faster consumer financial decisions, focusing on credit decisioning, financial transaction data, and account verification. The acquisition is part of a bigger shift that Mastercard has been undergoing in recent years, investing heavily in technology that enables better and faster decisions.
With a potential $160 million earn-out, the deal could be worth nearly a billion dollars in total.
That’s not exactly a massive transaction for a company with Mastercard’s scale - but it’s an indication of the direction management is pushing towards. And investors appear to be liking Mastercard’s trajectory right now.
The firm is in relatively rare company: It’s part of the top 29% of S&P 500 components that are actually up since the calendar flipped to January.
That relative performance matters right now in the wake of the Covid-19 crash.
Looking back at prior crisis investing environments over the last three and a half decades, stocks that have positive six-month relative strength saw a 78.4% chance of a positive 1-month forward return.
That’s about a 50% higher future win rate than the average S&P 500 stock.
And now, Mastercard is looking primed for more upside in the near-term.
To figure out how to trade it, we’re turning to the chart for a technical look.
At a glance, Mastercard’s price action looks extremely orderly right now. After correcting hard alongside the rest of the broad market, shares have established a very well-defined uptrending channel, catching a bid on every test of trendline support along the way.
Since the calendar flipped to June, that uptrend has cooled a little. Shares hit their head on $310 resistance back at the beginning of the month, and they’ve been more or less stuck sideways since then. That’s not a red flag, however. Instead, the sideways consolidation in Mastercard actually sets the stage for the next leg higher.
Mastercard is currently forming an ascending triangle setup, a bullish continuation pattern formed by horizontal resistance overhead at the $310 level, and uptrending support to the downside. As shares get squeezed between those two key levels, they’re edging closer to a breakout above that $310 line in the sand.
Simply put, if shares can materially push through $310, we’ve got a brand new buy signal in Mastercard. Shares are testing that level this week.
From a risk management standpoint, the 50-day moving average has begun acting like a decent proxy for trendline support; that makes it a logical place to park a protective stop beneath in case the trend changes in Mastercard.
Meanwhile, the bulls look like they’re clearly in control of shares here.