Mastercard shares down as dim forecast sours profit beat

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Mastercard Inc forecast a weaker than-expected revenue growth for the last three months of the year on Thursday, overshadowing an upbeat quarter where the card issuer beat profit estimates on resilient consumer spending.

The company said it expected revenue to rise in “low double digits” at the lower end of its forecasted growth range for the fourth quarter. Analysts on average were expecting a near 15% gain, according to IBES data from Refinitiv.

Shares of the Purchase, New York-based company were down more than 2% in premarket trading. The stock had fallen 11% so far this year, as of Wednesday’s close.

Last quarter, Mastercard warned of a slowdown in spending from lower-income customers in the United States in the face of red-hot inflation.

Investors have been closely watching out for any signs of a crack in consumers’ financial well-being, and are punishing the stocks of card issuers on the slightest indication of a perceived weakness.

Shares of American Express Co dropped as much as 7% last Friday despite solid third-quarter results, as the card lender set aside bigger provisions than expected, sparking fears of a surge in potential defaults going forward.

The stock has since recovered after strong results from peer Visa Inc and as expectations grew that the Federal Reserve may dial back its pace of interest rate hikes going forward.

Mastercard’s profit came in at $2.5 billion (R45 billion), or $2.58 (R46.43) per share, for the three months ended on 30 September, compared with $2.4billion (R44 billion), or $2.44 (R45.40) per share, a year earlier.

Excluding one-time costs, Mastercard earned $2.68 (R48.40) per share, beating Street estimate of $2.56 (R47,32) per share. Reported revenue jumped 15% to $5.8 billion.