Morgan Stanley-Payments and Processing Stock Performance Review VMA, PYP...-110017088

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Payments and Processing | North America

Stock Performance Review: V/

MA, PYPL, AFRM



James E Faucette



 !"#$ " %&'&''()*+,,&

Shefali Tamaskar

-# ." 

./01#!"#$ " %&'&',)&*2(23

Meryl R Thomas, CFA

-# ." 

#0."!"#$ " %&'&',)&*4,,2

Michael N Infante



 .5/!"#$ " %&'&',)&*2)6&

Antonio Jaramillo

-# ." 

""#"!"#$ " %&'&',)&*2263



North America

 

As we look across stock performance and valuations, we see

stock performance dispersion has been substantial in '23-'24

even as Fintech multiples have widely compressed, and there

are 3 key areas that stick out to us across the payment

networks, FinTech, and smaller players.

 !"#$ $$%&'&(

)$*$+&with V/MA up 3.1%/6.4% month-to-date and 0.0%/(0.5%) week-to-

date respectively, while the Dow Jones U.S. Banks Index was down (1.2)% month-to-

date and up 2.4% week-to-date. Our previous analysis highlights that most, but not

all, of V/MA's underperformance vis-à-vis the S&P 500 YTD has come during periods

when Banks were outperforming the market. This large impact during periods of

Bank outperformance makes gauging idiosyncratic drivers difficult so we are often

suspicious that concerns like Class B share conversion, regulatory and interchange

settlement headlines, maturation of cash to electronic, etc. are more likely

narratives that are developed and repeated to explain stock action rather than

stocks reacting to those factors. See more here: Most of V/MA Underperformance

Seems to Be Correlated with Bank Outperformance.

,-./0"& )12"(334&2+!334&!5&(*

" &5& $&6)&$$ !)"!47"!$!7"%%**$8& %&

9 +$ :We think this is a key step in the right direction for expanding

availability in the US, as this will help drive Fastlane's acceptance expansion to

Adyen's US enterprise and marketplace customers. While we're pleased with PYPL

adding partners to expand widespread coverage, we note that this is unlikely to be a

needle-mover in the near-term given the lower take-rate estimated for Fastlane vs.

Branded. This news comes right after the previous week’s announcement about

Apple opening up its NFC chip (which enables Apple Pay's Tap to Pay functionality)

to third party developers, a key step in reducing Branded Checkout friction. See

more here: Apple Opening NFC in US/Elsewhere Should Drive PayPal Habituation &

Relieve Competitive Pressure.

8;"& )002! )& "(5*6*$+&+4 %7

) #5%6) *$+!<8'&5'=-)$#4$ :A blog post published by

the CFPB director Friday 8/16 noted that the BNPL industry is "responding favorably

and constructively" to the interpretive ruling issued in May which declared BNPL

providers are credit card providers. The CFPB's latest commentary on BNPL

regulation screens as a modest positive for BNPL providers like AFRM as the CFPB

doesn't intend to administer penalties for those that demonstrate a desire to comply

with the interpretive ruling, and while still dependent on the outcome of the

upcoming presidential election, the probability of CFPB policy continuity has

increased as of late (i.e., unlikely that BNPL regulation gets increasingly more

Morgan Stanley does and seeks to do business with

companies covered in Morgan Stanley Research. As a result,

investors should be aware that the firm may have a conflict of

interest that could affect the objectivity of Morgan Stanley

Research. Investors should consider Morgan Stanley

Research as only a single factor in making their investment

decision.

For analyst certification and other important disclosures,

refer to the Disclosure Section, located at the end of this

report.

August 26, 2024 12:39 PM GMT





punitive near-term), Additionally, verification of "ability to pay" is indexed to open-

ended credit lines and not necessarily to transaction-specific installment loans, so

onboarding requirements would only become more stringent for BNPL providers if

ability to pay requirements were to be extended to transaction-specific installment

loans, which doesn't seem to be a focus for the CFPB right now. We'll look to hear

more about this on Wednesday's F4Q24 earnings print. See more here: CFPB Won't

Penalize BNPL Providers in the Process of Conforming to the Recent Interpretive

Ruling.



 

Relative Stock Performance

 0"7+89""+7#/"## #":"&;<;0=<&*".<&*>1?

QTWO 129.9% QTWO 72.5% UPST 60.9% UPST 14.1%

AFRM 76.8% UWMC 33.1% PYPL 23.0% AFRM 10.6%

UWMC 71.5% FIS 32.0% CWAN 19.6% LPRO 5.6%

FOUR 45.5% FISV 27.8% UWMC 17.7% PYPL 5.5%

VRRM 45.4% CWAN 23.0% FOUR 16.7% UWMC 5.3%

FLYW -44.6% AVDX -36.3% AVDX -36.5% AVDX -3.0%

LPRO -31.9% AFRM -36.0% NRDS -24.0% MQ -1.5%

RKT -24.2% LPRO -33.4% ENFN -14.4% SQ -0.8%

AVDX -22.6% FLYW -24.1% RPAY -12.7% MA -0.5%

EVTC -15.4% MQ -23.5% IIIV -12.6% FOUR -0.4%

YTD

1 Month

1 Week

Payments

Top 5

Bottom 5

"# @ <"78<"#$-# .

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Tickers 26-Aug-23 25-Aug-24 Change 1-Jan-24 25-Aug-24 Change 26-Jul-24 25-Aug-24 Change 18-Aug-24 25-Aug-24 Change

S&P 500 4,405.7 5,634.6 27.9% 4,769.8 5,634.6 18.1% 5,459.1 5,634.6 3.2% 5,554.3 5,634.6 1.4%

Nasdaq 14,941.8 19,720.9 32.0% 16,825.9 19,720.9 17.2% 19,023.7 19,720.9 3.7% 19,508.5 19,720.9 1.1%

ADP 253.1 269.6 6.5% 233.0 269.6 15.7% 252.7 269.6 6.7% 264.1 269.6 2.1%

AFRM 17.8 31.5 76.8% 49.1 31.5 (36.0%) 27.1 31.5 16.1% 28.5 31.5 10.6%

AVDX 10.2 7.9 (22.6%) 12.4 7.9 (36.3%) 12.4 7.9 (36.5%) 8.1 7.9 (3.0%)

BR 183.7 209.0 13.8% 205.8 209.0 1.6% 212.6 209.0 (1.7%) 208.7 209.0 0.2%

CPAY 265.2 298.0 12.3% 282.6 298.0 5.4% 292.2 298.0 2.0% 293.1 298.0 1.7%

CWAN 17.5 24.6 40.7% 20.0 24.6 23.0% 20.6 24.6 19.6% 23.6 24.6 4.4%

ENFN 8.4 8.3 (1.0%) 9.7 8.3 (14.5%) 9.7 8.3 (14.4%) 8.1 8.3 2.6%

EVTC 39.5 33.4 (15.4%) 40.9 33.4 (18.5%) 34.9 33.4 (4.4%) 33.1 33.4 0.7%

FIS 54.7 79.3 44.8% 60.1 79.3 32.0% 75.7 79.3 4.7% 79.0 79.3 0.3%

FISV 121.5 169.8 39.8% 132.8 169.8 27.8% 159.9 169.8 6.2% 167.3 169.8 1.5%

FLYW 31.7 17.6 (44.6%) 23.2 17.6 (24.1%) 18.5 17.6 (5.1%) 17.7 17.6 (0.4%)

FOUR 55.8 81.1 45.5% 74.3 81.1 9.1% 69.5 81.1 16.7% 81.5 81.1 (0.4%)

GLBE 39.0 34.9 (10.5%) 39.6 34.9 (11.9%) 34.8 34.9 0.3% 34.6 34.9 1.0%

GPN 121.7 110.5 (9.2%) 127.0 110.5 (13.0%) 101.2 110.5 9.2% 108.8 110.5 1.5%

IIIV 22.9 21.8 (4.5%) 21.2 21.8 3.1% 25.0 21.8 (12.6%) 21.6 21.8 1.3%

JKHY 158.4 164.6 4.0% 163.4 164.6 0.7% 170.3 164.6 (3.3%) 165.1 164.6 (0.3%)

LPRO 8.3 5.7 (31.9%) 8.5 5.7 (33.4%) 6.3 5.7 (10.6%) 5.4 5.7 5.6%

MA 402.9 466.4 15.8% 426.5 466.4 9.4% 438.2 466.4 6.4% 468.9 466.4 (0.5%)

MQ 5.7 5.3 (5.8%) 7.0 5.3 (23.5%) 5.4 5.3 (0.6%) 5.4 5.3 (1.5%)

NCNO 28.7 35.0 22.0% 33.6 35.0 4.1% 33.5 35.0 4.4% 34.2 35.0 2.2%

NRDS 8.8 12.2 39.0% 14.7 12.2 (17.2%) 16.1 12.2 (24.0%) 11.7 12.2 3.8%

PAYX 121.9 130.0 6.7% 119.1 130.0 9.1% 125.8 130.0 3.4% 125.2 130.0 3.8%

PYPL 61.2 71.7 17.2% 61.4 71.7 16.8% 58.3 71.7 23.0% 68.0 71.7 5.5%

QTWO 32.6 74.9 129.9% 43.4 74.9 72.5% 69.0 74.9 8.5% 72.1 74.9 3.9%

RKT 56.9 43.1 (24.2%) 54.2 43.1 (20.4%) 44.9 43.1 (3.8%) 42.7 43.1 1.0%

RPAY 9.2 8.7 (5.7%) 8.5 8.7 1.4% 9.9 8.7 (12.7%) 8.2 8.7 5.1%

SQ 55.9 65.4 17.0% 77.4 65.4 (15.5%) 60.2 65.4 8.6% 65.9 65.4 (0.8%)

SSNC 55.9 74.0 32.5% 61.1 74.0 21.1% 72.3 74.0 2.4% 72.7 74.0 1.8%

UPST 29.9 42.0 40.5% 40.9 42.0 2.8% 26.1 42.0 60.9% 36.8 42.0 14.1%

UWMC 5.6 9.5 71.5% 7.2 9.5 33.1% 8.1 9.5 17.7% 9.0 9.5 5.3%

V242.6 267.4 10.3% 260.4 267.4 2.7% 259.5 267.4 3.1% 267.4 267.4 0.0%

VRRM 19.2 27.9 45.4% 23.0 27.9 20.9% 30.4 27.9 (8.4%) 27.2 27.9 2.6%

WEX 188.0 185.6 (1.3%) 194.6 185.6 (4.6%) 180.4 185.6 2.8% 178.3 185.6 4.1%

WU 11.9 11.8 (1.1%) 11.9 11.8 (1.0%) 12.8 11.8 (7.7%) 11.8 11.8 0.1%

Fintech & Payments

YTD

1 Week

1 Month

"# @ <"78<"#$-# .

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MPaymentsandProcessing|NorthAmericaStockPerformanceReview:V/MA,PYPL,AFRMJamesEFaucette!"#$"%&'&''()*+,,&ShefaliTamaskar-...

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