Mastercard Incorporated (MA): A Bull Case Theory

We came across a bullish thesis on Mastercard Incorporated (MA) on Incremental Returns’ Substack. In this article, we will summarize the bulls’ thesis on MA. Mastercard Incorporated (MA)’s share was trading at $585.60 as of 30^th May. MA’s trailing and forward P/E were 41.07 and 36.76 respectively according to Yahoo Finance.

Mastercard benefits from powerful competitive advantages that have cemented its position as one half of the global payments duopoly alongside Visa. Its multi-party network connects consumers, merchants, and financial institutions, creating strong network effects that increase with scale.

With over $8 trillion in annual purchase transactions and deep relationships across the financial ecosystem, Mastercard has built high barriers to entry and significant switching costs. Its scale drives operational leverage, reflected in operating margins above 58%. Mastercard is well-positioned to capitalize on long-term secular trends, particularly the global shift from cash to digital payments and the ongoing growth of e-commerce.

These trends expand transaction volume and revenue per transaction, especially through higher-margin cross-border and card-not-present purchases. Additionally, Mastercard benefits from the rise of digital wallets and Buy Now, Pay Later (BNPL) solutions, which rely on its infrastructure and generate higher transaction values and processing fees. The company is also targeting the $120 trillion B2B payments market, where digitization offers efficiency, fraud protection, and working capital benefits.

Mastercard’s fast-growing Value Added Services segment—comprising cybersecurity, analytics, and loyalty tools—deepens customer relationships, raises switching costs, and diversifies revenue. Risks include regulatory scrutiny of interchange fees, pressure from large merchants seeking lower costs, and the emergence of real-time payment networks (RTPNs). However, Mastercard is actively integrating with RTPNs through acquisitions like Vocalink and leveraging its MOVE platform for cross-border real-time payments.

Overall, Mastercard’s entrenched network, strategic positioning, and exposure to global payment trends support a strong long-term investment case despite regulatory and technological headwinds.

Previously, we have covered MA in February 2025 wherein we summarized a bullish thesis by Chit Chat Stocks on Substack. Mastercard reported strong Q4 2024 results with 12% volume growth and a 6% increase in cards in circulation, demonstrating its durable competitive advantages and leadership in global payments. The company had delivered a 29.9% total return CAGR since its 2006 IPO, highlighting its resilience and long-term potential despite occasional high valuations. Since our last coverage, the stock is up 4% as of 30^th May.

Mastercard Incorporated (MA) is on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 155 hedge fund portfolios held MA at the end of the first quarter which was 151 in the previous quarter. While we acknowledge the risk and potential of MA as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.