I read today that the IPO date is "March." Anyone know anything more specific than that?Thanks.
Fidelity says March 19th is the pricing date, so that means it will likely start trading on March 20th (a Thursday).
Thanks! If you get any additional info, please keep us informed.
I'd highly recommend reading today's Wall Street journal. There was a writeup today that should answer all of your questions. There was also, coincidentally(?) a Fool article today. The bigger question for me is has anyone valued it compared to say, MA or AXP, yet? I'd be willing to jump on board the IPO train, but only if some meat is left on the bone for us small time guys...
I'm fairly new to this whole game but if VISA does anything like Mastercard did when it went public I want to be on this wagon...my question is how to I buy into the initially offered shares? Will the shares become available on the 19th just as a normal sale until the shares are gone? Just need some advice....
I'm currently looking at VISA. I haven't come to the valuation yet because I've been paying close attention to the risks associated with owning the business. I've already seen enough to make me skeptical.
A few comments in response to questions posed...1.) MA's IPO was not well subscribed due to the "risks" associated with that IPO as well -- all the potential class action lawsuits2.) To get shares at the IPO price, you need to contact your broker. Most discount brokers do not give out shares in IPO to retail customers. Most IPO shares go to institutional customers (the ones who trade in 25,000 share lots!).3.) It's tough to compare VISA to AXP since AXP loans money to customers. Therefore the best comparison is to MA.4.) I doubt you'll see the same return for VISA as you did from MA, since MA has set the stage and provides a good comparison for Visa.5.) My quick and dirty valuation says Visa at $40 is valued similarly to MA at $200.
Hey Camthanks for the informationHow did you get $40?I am guessing its going to run up a bunch higher than that the first day--not that it is worth moreStill bitter about Chipotle. Decided it was overpriced at $35 and no one would give me IPO prices. Need to start making bigger buys.
I just used $40 since the range is $37-$41 at the current time. I wouldn't be surprised to see the range increased as we get closer to the date.
TMFMrCHW, how do you get that $40 valuation? Based on the relative sizes of the two companies and their near-identical business models, I get closer to $90 based off MasterCard's market cap and the amount of stock Visa wants to sell.**Disclaimer: I fully admit that I only half know what I'm doing. I'm not trying to challenge your judgement, more like asking what I'm doing wrong so I can correct my assumptions.
5.) My quick and dirty valuation says Visa at $40 is valued similarly to MA at $200.These guys agree with you.I just posted this on the V (Visa Board). Yes, there is a Visa company board open now.http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/02/28/BUAJV9OHP.DTLWhen payment rival MasterCard went public two years ago, it sold shares at a price about 15 times its earnings. Since then, the stock has roughly quintupled. Factor in MasterCard's profit gains in the intervening years, and shares now trade at approximately 22 times earnings.The MasterCard example is coloring everything about the Visa IPO.Visa's underwriters figure that MasterCard set its IPO price too low. They're pegging Visa's offering not to what MasterCard sold for two years ago, but rather to where MasterCard stock stands today. Visa's indicated IPO price between $37 and $42 per share would put it at about the same value as the roughly 22 times earnings that MasterCard stock sells for now.What that means is that the Visa IPO won't be as cheap as MasterCard. Visa buyers are not likely to see the kind of outsized gains in the first few years after the company goes public that investors in the MasterCard offering did. And if Visa's IPO price were to climb above the indicated range, the deal would become increasingly expensive and correspondingly more risky.Looks like the small investor will be left out in the cold on this one. I'm not buying at the IPO price and certainly not above the IPO price. I will be content to watch this one - intently. A better play might be MA if a lot of MA stock holders sell and move to V. Should be fun to watch this all unfold.ferjen
Here's my quick calcs: MA V Notes Shares Out (m) 136 857 Price $200 $41 Assume Offering Price at high end of range Market Cap (m) $27,200 $35,137 Net Cash (m) $3,000 $4,000 (additional $3B restricted to pay liabilities) EV (m) $24,200 $31,137 2007 Sales (m) $4,070 $5,193 Op Income (m) $1,108 $1,537 (excluding litigation reserve) P/S 6.7 6.8 EV/S 5.9 6.0 P/OI 24.5 22.9 EV/OI 21.8 20.3 So Visa at $41 is perhaps a slightly better value than MA at $200. Perhaps it deserves a higher multiple due to their size. But I'd rather own MA at $200 than V at $45 or higher.Cameron
MA V Notes Shares Out (m) 136 857 Price $200 $41 Assume Offering Price at high end of range Market Cap (m) $27,200 $35,137 Net Cash (m) $3,000 $4,000 (additional $3B restricted to pay liabilities) EV (m) $24,200 $31,137 2007 Sales (m) $4,070 $5,193 Op Income (m) $1,108 $1,537 (excluding litigation reserve) P/S 6.7 6.8 EV/S 5.9 6.0 P/OI 24.5 22.9 EV/OI 21.8 20.3
>Perhaps it deserves a higher multiple due to their size.Definitely you can rationalize higher multiples for VISA based on market dominance, business model, and expanding margins. Almost certainly the post-IPO market will award an initial premium multiple as it does for most every other truly dominant player.The question is, in what is very definitely a bear market, which very probably will last at least a full year, how long will VISA or any other stock hold up against the "tide going out"--slow steady relentless indiscriminate selling as wave after wave of financial bad news sweeps the market.On the other hand, VISA will be perceived as an island of quality, and flight-to-quality will certainly be one of the dynamics in 2008, especially among fund managers who HAVE to put cash SOMEWHERE... you know every fund will have to own it, and they have no doubt already subscribed their shares.In this recession both credit and debit transactions will decline in number, therefore it's likely that this year's earnings will be unimpressive, though VISA's relentless margin expansion may blunt the effects of transaction declines. Nevertheless, it's a factor that will be lowering analyst forward estimates, and forward PE tolerance.On balance, though, I feel like there ought to be at least 50,000 people each in the US, Japan, SE Asia, Australia, India, and Europe who will want 500 shares of VISA, and that would take care of 150 million shares right there. I rather think a few hundred mutual funds will gladly stash away the remaining 256 million shares for the next 30 years or so... well you can divide it up anyway you wish, but the point is there's no looming glut of shares here, and plenty of reason for many to snap them up for long holds--not flips.Yeah I think I'll buy some.
I beg to differ, you said:“In this recession both credit and debit transactions will decline in number, therefore it's likely that this year's earnings will be unimpressive”. As a restaurateur, I have seen credit transactions spike up lately, from 15 to 20% of revenues to often over 30%. In fact just last week we set an all time per store one day high for credit/debit transactions (34% of revenues). As a merchant, I loathe to pay the service charges (that’s why I invested in MasterCard symbol MA), particularly as that expense has steadily increased. But that steady expense has slightly accelerated lately as consumers are feeling more pinched. The last conference call for MA got my attention when someone mentioned that struggling consumers were driving up revenue for service fees as opposed to the discount fee. See, MA and Visa charge per transaction fees, and so called discount fees where they take a percentage of the transaction. What MasterCard was alluding to was that every time a card is declined, MA earns a 5 cent fee, and would likely make an additional 5c fee and still get the discount fee when the consumer tries another credit card that goes through.As going concerns, I only expect MasterCard and Visa to become stronger in this economic climate. My concerns lie not with the consumer. My concerns are what is the business truly worth to shareholders, and who will hold the majority of shares. I can’t accept the Performa balance sheet that indicates that its worth $28B to be market capitalized for $18B. If the company was worth $27.7B you can be damn sure they would be asking for that amount. They’d either issue more shares or ask a higher price. Goodwill and Intangible assets should not account for 60% of assets. I feel we must discount the company’s assessments in the regards. IMO a company probably worth $10-15B or around $15-20/share.I am also fearful of price manipulation by institutional holders as they try to offset their losses from the credit meltdown. Yet, I must admit, that I will buy a small stake at the outset, fully prepared to take a 50% loss for years. If it debuts at a more reasonable price than the projected $40, I likely dive in deep. Hope this helps,Bill
I think I see where I was making my mistake. I looked at the shares being directly sold to the public in the IPO (406 million). I didn't even notice the total number of shares including those retained by the banks (857 million). I ran my calcs by the book, made sure everything was all nice and tidy, and I was starting with the wrong numbers to begin with. Garbage in, garbage out.Another 451 million shares drops the value from ~$90 smack down to the $40 price range of the IPO. In other words, the only major reason to buy Visa over Mastercard is if you think it has a strong competitive advantage.TMFMrCHW, thank you VERY much. You almost certainly saved me from losing a lot of money and spending the next year trying to figure out what the heck just happened.
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