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Mastercard Stock Leaps As Travel and Spending Rebound Drives Q3 Earnings Beat

Mastercard reported third quarter profits of $2.4 billion Thursday as a rebound in travel and consumer spending boosted the credit card issuer's bottom line.

Mastercard  (MA) - Get Mastercard Inc. (MA) Report posted stronger-than-expected third quarter earnings Thursday, following similar strength from card rival Visa  (V) - Get Visa Inc. Class A Report, as consumer and travel spending rebounded from last year's pandemic lows. 

Mastercard said diluted earnings for the three months ending in September were pegged at $2.44 per share, up 52.5% from the same period last year and firmly ahead of the Street consensus forecast of $2.19 per share. Group revenues, Mastercard said, rose 30% to $5 billion, just ahead of analysts' estimates of a $4.95 billion tally. Gross dollar volumes were up 20%, the group said, while purchase volumes rose 23%. 

“We saw continued momentum across the business as we delivered strong revenue and earnings growth again this quarter," said CEO Michael Miebach. "Our performance was driven by the execution of our strategy, healthy domestic spending and solid growth in cross-border spending which has recently returned to pre-pandemic levels.”  

“We are extending the scale and power of our trusted network through innovations like our new Mastercard Installments program,:" he added. "And, we continue to add to our efforts in cryptocurrency services and open banking through the acquisition of CipherTrace and the planned acquisition of Aiia.”  

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Mastercard shares were marked 1.7% higher in early trading following the earnings release to change hands at $341.50 each. 

Earlier this week, Visa said a recovery in both in-store shopping and credit card volumes helped net income rise to a Street-beating $1.65 per share, with total transactions rising 21% to $43 billion.

Visa share were marked 0.7% higher at $217.33 each in pre-market trading Thursday, following-on from yesterday's 7% slump. 

Earlier this month, the Commerce Department said U.S. retail sales in September rose 0.7% from the previous month to a collective $625.4 billion, well ahead of the Street consensus forecast of a 0.2% decline, and 13.9% higher from the COVID-hit period in the fall of last year. The August total was revised upward to a gain of 0.9%.

"This illustrates the strength of the American consumer, and we believe robust spending and borrowing will still continue in the future and that the pandemic did nothing to change Americans’ willingness to spend money," said Chris Zaccarelli, CIO at the Independent Advisor Alliance in Charlotte, North Carolina.