Visa: How Will Amazon Ban In U.K. Impact Business Outlook?

(Preview) Company Update (V US) (Buy)

Summary

• Visa's share price has fallen 6.7% since Amazon announced it will stop accepting U.K. Visa credit cards in 2022 - an over-reaction in our view.

• While the ban is ostensibly about Visa's U.K. fee increases, Amazon is applying pressure on multiple fronts and the U.K. may be a pilot.

• However, Amazon's U.K. volume is immaterial for Visa, and its global volume is likely just a low-single-digit percentage of Visa revenues.

• We believe there will be a resolution, as with past disputes - the consumer is on Visa's side, and Amazon risks losing business.

• With shares at $200.86, we expect a total return of 106% (20.8% annualized) by September 2025, in just over 4 years. Buy.

Introduction

Visa Inc. shares have fallen 6.7% since last Wednesday (November 17), when it was first reported that Amazon has announced that it will stop accepting U.K. Visa credit cards from January 19, 2022.

Including this latest decline, Visa's share price has now fallen 20% from its July peak and 8% year-to-date. Mastercar…