Tuesday's Headlines: Mastercard Under FTC Investigation
Here were the biggest movers in the MyWallSt shortlist yesterday:
Moving Up ⬆️
Cloudflare (NET) +13.2%
MercadoLibre (MELI) +12.4%
Duolingo (DUOL) +11.0%
Snowflake Inc. (SNOW) +9.9%
Lovesac (LOVE) +9.9%
Moving Down ⬇️
Stitch Fix (SFIX) -3.7%
Vail Resorts (MTN) -2.1%
FedEx (FDX) 0.0%
Visa and Mastercard Under FTC Investigation 💳
The Federal Trade Commission (FTC) is probing into Visa and Mastercard’s (MA) practice of routing online payments using security tokens. The commission has an ongoing investigation into the two companies around blocking merchants using alternative payment networks, so it is unclear whether this is part of that existing review or not.
A security token replaces a card number when paying for goods or services online. The network on the card — usually Visa or Mastercard — will be the one to generate said security token which will be a randomized 16-digit number sent to the payment network. Mastercard or Visa can easily associate this number with its corresponding debit card when sent on their networks. If the token is sent on another network, however, they must unscramble it. The FTC is reviewing whether this practice is restricting competition in the debit-card routing industry.
Federal law requires that merchants be given at least two options for routing debit card transactions. The investigation in question is looking into whether the credit card companies are making it more difficult for merchants to send payments on alternative networks by limiting the information sent. This would make it more likely for a person’s bank to reject that payment. The FTC is also exploring whether Visa and Mastercard are restricting the choice of routing network when customers save card details with a merchant. This is often done through tokenization.
The probe is an after-effect of The Federal Reserve’s comments reiterating to banks that they must provide at least two options of payment networks when routing debit card payments of all kinds.
Roblox Soars on Boosted Bookings Numbers 🕹
Shares of Roblox were up a whopping 20% yesterday after the video game platform announced its figures for September.
Bookings, which include revenue and deferred revenue, are expected to come in at between $212 and $219 million, representing growth of up to 15% year-over-year. These figures are made even more impressive when you consider the 6% negative impact caused by foreign exchange fluctuations thanks to the strong U.S. dollar.
Aside from bookings, figures across the board paint a rosy picture for Roblox. Daily active users (DAUs) grew 23% for the month to reach a whopping 58 million, while hours engaged rose 16% to 4 billion. The company’s enviable engagement amongst the younger generations is clearly on show here.
Yesterday’s boost is a welcome sight for Roblox investors, who have been suffering as of late. The stock is down 57% year-to-date and almost 70% from all-time highs set at the end of 2021. Its recent slide can be attributed to a shift in sentiment away from tech, combined with a rapid descent in the company’s growth rate.
Having gone public last year at a time when revenue was growing in triple-digits, the company’s recent quarter of 30% growth is a far cry from its former glory.
A Stronger Quarter Than Expected For FuboTV 📺
Shares of FuboTV are up close to 10% in premarket trading this morning after the company issued preliminary results from its last quarter that showed a stronger-than-expected performance.
In the release last night, FuboTV said that it expects to register more than 1.22 million paid subscribers in North America for Q3, which would represent year-on-year growth of more than 27%. This was above the company’s own guidance of between 1.14 - 1.16 million additions.
In total, FuboTV now expects to have a global subscriber base of more than 1.57 million, whereas analyst estimates had sat around 1.44 million for the quarter. What’s more, the company also expects its final revenue total to come in higher than expected — North American revenue up 34% to hit $210 million and rest-of-world revenue to come in around $5.5 million.
Interestingly, the company also announced that it was shuttering its online sports betting division, Fubo Gaming. In the statement, management said:
“Following our previously announced strategic review, we have concluded that continuing with Fubo Gaming and Fubo Sportsbook in this challenging macroeconomic environment would impact our ability to reach our longer-term profitability goals.”
We’ll have to wait until the full third-quarter earnings call to get all the details, but investors will likely praise management’s decision to focus on profitability over growth in the current economic environment.
FuboTV is a television streaming service that operates primarily in the U.S. and Canada. The company’s specific niche is live sports, which has traditionally been dominated by cable channels. Going public in October 2020 and achieving a valuation just north of $620 million, FuboTV stock is currently about 60% off its IPO price.