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Fannie and Freddie: The End of the P...   Extra Credit, Thursday Edition
Mar 19 2008 5:30PM EDT

Chart of the Day: Mastercard vs Visa

When Mastercard went public in May 2006 its opening price was $40.30 per share; today it's over $200. What are the chances that something similar is going to happen with Visa? About zero:

mavisa.jpg

(Incidentally, American Express is worth about $48 billion, somewhere in the middle there.)

There are good reasons why Visa might be worth more than MasterCard, but $30 billion more? Count me in for the long-Mastercard, short-Visa relative value play. In any case, if Visa simply can't quintuple in value over the next two years: if it did, it would be worth $290 billion, and be the third most valuable company in the US, after Exxon Mobil and GE.

All the same, I'm heartened by the nice pop in Visa shares today. They priced above their indicated range, and still managed to end thd day up more than 28% from the IPO price. Amidst all the gloom and chaos, it seems that big deals can still get done - in the equity markets, at least, if not in the debt markets.

(Via Abnormal Returns)

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