Mastercard jumps after Q2 earnings, is ’embedded finance’ the future?

Mastercard (NYSE:MA) just announced its Q2 earnings and the stock is up 4% during trading hours today.

The company posted a beat on both revenue and EPS as consumers continued spending during the quarter.

Double-digit growth of both the top line and bottom line comes as a relief to investors who were worried about the consistent downslide in the stock’s price since the last earnings announcement.

We delivered another strong quarter across all aspects of our business with double-digit net revenue and earnings growth.

The revenue for the quarter came in at $6.96 billion against estimates of $6.85 billion while the EPS clocked in at $3.59, comfortably beating estimates of $3.51. The company has now beaten analyst estimates four quarters in a row.

The future of payments

Mastercard is one of the most solid companies in the US market. Since 2006, it has offered annualized returns of over 30%.

This growth has only been possible because of a forward-looking management style that taps into change and newer technologies to improve payment processing for the public.

One such change is happening before our eyes and it involves embedded finance. Embedded finance is the integration of payment facilities into nonfinancial platforms so users don’t have to face the hassle of inefficient payment procedures.

According to the EVP Jennifer Marriner, embedded finance is the future of commerce.

People want to move from traditional financial transactions to modern, digitized, and integrated ways of carrying out their financial obligations. Mastercard is setting itself up to be at the forefront of that change.

We’re definitely seeing on the B2B side a realization that there’s a way they can streamline their business through embedded finance.

Marriner feels that businesses are responding positively to the company’s efforts to make financial transactions easy for businesses.

The company’s partnerships with SAP and Oracle are not only helping it bring about that change but also making it realize that it is indeed the future.

She thinks that small and medium businesses stand to benefit the most from things like tokenization and contactless payments.

These businesses already use applications for inventory management and accounting and by embedding financial transactions into these applications, Mastercard can make life easier for thousands of businesses across the world.

Once Mastercard establishes itself as the pioneer in embedded finance, it can then move on to providing additional services like customizations and loyalty programs, which will help the company continue its growth in the future, just like it has done in the past.

What does the chart say?

One look at the chart tells us that the stock was trading at an important support level just before the earnings.

Traders were waiting for the earnings report and will be happier now that there is one less variable to trigger another downside.

If the stock continues to respect this support level, and the company keeps performing on a fundamental level, investors taking a position in the stock right now will be well placed to cash in the embedded finance revolution.

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