I was just doing some finance reading today and came by an article about the much anticipated VISA Initial Public Offering (IPO).  The reason that investors are excited?  VISA is the largest credit card network in the U.S and they basically print money.

VISA is hoping that their IPO will raise $10 billion which, if achieved, will be the second largest IPO in US history.

How does VISA make money?  Through the fees they charge to it's card issuers and merchants.  Do they face the risk of the expense of credit card fraud?  Nope, their card issuers take care of that. 

The biggest risk that they face right now are the "anti trust" type scenarios where competitors sue them for being the biggest and baddest in the credit card space.  For example, VISA and American Express just settled a lawsuit for $2.25 billion alleging that VISA used illegal practices to stifle competition.

If you want an example of how a successful credit card company IPO looks like,  check out the Mastercard stock.  They started @ $40 around 18 months ago and currently trades for around $206.  That's right, a 5 bagger in 1.5 yrs for a credit card company that does HALF the business of VISA.


I wonder what the VISA stock chart will look like on the day of IPO?

Are you interested in getting involved with VISA stock?  Check out my discount brokerage comparison

Update: VISA is now trading on the NYSE under the symbol V.  You can see the latest Visa stock chart here

photo credit: rick


  1. Patrick on January 9, 2008 at 10:10 am

    I want to do more research on this because I think it might be huge as well. Do you know what it will take to get in on the IPO, or is this something that pretty much only the big boys can get in on?

  2. Telly on January 9, 2008 at 10:41 am

    I’ve been wondering about this as well but I have no idea how one gets “in” on one of these IPOs. How long after can regular kids can get in on the action?

  3. FrugalTrader on January 9, 2008 at 11:11 am

    I would say that with all the hype of the VISA IPO, only the big boys can get in at the IPO level. The rest of us will have to trade it when it reaches the market.

  4. Lawrence on January 9, 2008 at 11:26 am

    FT, I have a feeling you’re right. But, even if you get “in” on the first days of market trading the potential will be amazing.

    You seem to have a knack for finding good IPOs (i.e.: you’re (or your wife’s) call on LULU). Keep it up!

  5. Canadian Dream on January 9, 2008 at 11:42 am

    IPO’s are all pre-sold to mostly large investors prior to opening up on the market. Some private investors can get in on these but typically only people with contacts with the company handling the IPO.

    I avoid first day or even weeks of IPO’s since the average guy demand is always too built up prior to the first trading day. It’s ususal better to wait in the wings until the first rush is over. Does any one recall what happend to Tim Horton’s stock during the first few months?

    I agree Visa could be a great stock to own.


  6. Silicon Prairie on January 9, 2008 at 12:28 pm

    I believe Tim is correct, although companies can choose to do it other ways that make it easier for individual investors. When they’re doing an IPO they’re probably more concerned with getting rid of all the shares smoothly than helping people buy a few at a time though.

    I was surprised when I heard about this because Visa seems to have gone a long time without being a public company – I wonder what changed their mind. It’s even more surprising that Mastercard is a recent IPO as well!

    My favorite rewards card is a Visa so I hope they continue to do well.

  7. Warren on January 9, 2008 at 12:30 pm

    Tim, I think there is still a good opportunity to get in on IPOs on the first few days. LLL is a good example, I think the IPO price was $23 or so, I got in at $31 later that day. It is “only” trading at $37 today but was as high as $48.

    Visa sounds like a no brainer, my only concern is the looming credit crunch, which should work its way through credit cards in 2008-09.

  8. nobleea on January 9, 2008 at 1:11 pm

    LLL has traded as high as 59$. It was a different IPO in that every employee could have bought up to $10K in shares at the IPO price ($18), which would have been an outstanding purchase (I’m sure few did). LLL is a good trader as it seems to go through some wild swings.

    VISA sounds like a no brainer as well. I might wait a few weeks to buy in though. As the financial picture becomes clearer in the US, the initial exuberance around the IPO might die off. MC too could lose some of it’s shine.

    (LLL is different in that the majority of it’s revenues come from outside the US).

  9. FourPillars on January 9, 2008 at 1:17 pm

    I have no idea if VISA will be a good stock to own or not, but what I do know is that the purpose of an IPO is to get as much money out of the investors as possible. They will try to take advantage of all the “excitement” plus the great return from MasterCard to crank up the IPO price.

    All I’m saying is that there is no such thing as a “no brainer” when it comes to investing.


  10. David Cox on January 9, 2008 at 2:09 pm

    Right on buddy!

    I’ve been following the VISA IPO for nearly a year and I’m very excited for it. (It is even one of my 2008 financial goals)

    While I don’t think that VISA’s performance will mirror that of Mastercard, I think that VISA is an excellent company that will generate excellent gains for investors. Buy and hold and I doubt regret is that emotion that will come to mind when you think back to the days of the VISA IPO 20 years from now. :)

  11. Labas on January 9, 2008 at 2:56 pm

    Emotions aside, here are facts:
    * Visa will be trying to sell 775M of shares and planning to raise 10B$.
    * based on above, initial share price would be ~13$.
    * Net income up to 07/2007 was 723M – according to http://www.ipohome.com/common/ipoprofile.asp?ticker=V
    * based on above P/E = 10B/723M ~ 14
    * MasterCard’s current P/E is about 32, so VISA has potential to grow 128% or to about 30$/share.

    * With all buzz created around VISA IPO, I am sure that price will jump above 30$/share before it reaches public.
    * with credit issues that currently happens in US, it would be naive to think that it effects only mortgages. Banks will be more cautious advancing credit – including credit cards wich will impact short-term VISA growth.

    Just few of my thougts on the topic. Want to check what others think about those thoughts since I can be dead wrong and miss “no brainer” opportunity.

  12. Investing911 on January 9, 2008 at 3:21 pm

    You may not get the initial IPO price but once it hits the market on the first day you can certainly buy at the evalated price as the big boys don’t mind cashing out some of their investment.

    I cashed in with VMWare’s initial IPO ( http://investing911.blogspot.com/2007/08/vmware-vmw-insanity-ipo.html ) – but there was much more of a low roar about the VMWare.

    The hype surrounding the Visa IPO is something that I would be scared of. I think I may try to buy on the first day of trading and then get out when I get a nice return on that as I sell to the people who are still buying the hype.

    As someone mentioned earlier, Tim Hortons had alot of hype around their IPO and the price you saw it trading at in the first few days was much higher than it even did in the following 12 months. Just the intraday price changes are astounding!

  13. vr6man on January 9, 2008 at 8:09 pm

    when is the ipo happening ?

    • FrugalTrader on January 9, 2008 at 8:43 pm

      vr6man, from my reading the IPO date is supposed to be sometime in the first quarter of 2008. I don’t think anything is definitive yet.

  14. White Eagle on January 9, 2008 at 8:42 pm

    One of the theories I heard was that you hould short Mastercard when the VISA IPO hits. The thinking is that the money in MC will head over to VISA… It could great a buying opportunity for those interested in MC.

  15. […] Dollar Journey – VISA IPO is Going to Be Huge! I think so as well. If VISA performs anything like Mastercard has since it went public almost 2 […]

  16. redrum540 on January 13, 2008 at 11:01 pm

    I think you’re all right about buying V on the first few days. I’m setting an amount that I would like to invest and a limit on how much i’ll pay based on the value of the stock(expecting some hype to inflate the price). Go into it using dollar cost averaging during the first month and you should reduce your risk and not feel ripped off if it takes a hit in the first few days. Simple lesson by Graham. If you’re in it for the long then you’ve got a while to buy… one month is very short time if you’re looking at a 20 yr hold. Which is probably a good idea with more and more emerging economies moving to join the rest of the world with the credit card craze! I don’t even carry cash anymore… haven’t in years. Good luck on your research

  17. L R on January 26, 2008 at 11:52 pm

    Hello all
    Very interesting post. I too am waiting and somewhat excited about Visa. I hope it happens soon. I am thinking maybe around end of Feb. 2008. Yet, with so much happening with the financials in the market right now , they may even postpone the IPO.

    We shall see
    take care

  18. LUV IPOS on January 29, 2008 at 6:49 pm

    Greetings Investors,
    I agree the initial public offering of V is creating a level of excitement not seen sense the Google IPO. The Visa IPO will be HUGE– however; due to the credit crunch hype, the price could deflate over time until economic conditions are more favorable for its anticipated super-climb up in value. For the long-term–its a home-run stock!

  19. mon ami on February 5, 2008 at 4:19 pm

    Yah, recession knoking on our door! Look at yahho-Microsoft game which Yahho requested MSFT to help lift it’s stock and people reacted like it is true!! Rich+rich=RICHER.Any way,your and my $ is invested by moneymanager and we have no where to go!!

  20. Adeptus on March 3, 2008 at 11:02 pm

    For those of you looking for info regarding the VISA IPO, look no further than:


    The above site contains both the prospectus info as well as a 30 Minute video by Visa road-showing their IPO. They provide some very good stats and economic info regarding Visa – past, present and future.

    From what I’ve been reading everywhere, Visa is a no-brainer – even more so long term.

    Try to get in on it ASAP! Heck, even Cramer recommends it!
    Cramer’s game plan for next week… “Do whatever you can to get in on the Visa IPO!”

    Link: http://www.cnbc.com/id/23408269

  21. […] Million Dollar Journey […]

  22. MuXx on March 11, 2008 at 1:53 pm

    I would hold my horses on jumping into the Visa IPO race, if you read between the lines of what Greenspan said regarding Master Card, this beast will fall to shake off the dust before it climbs. There are a lot of people that are looking to take profits early in this – the current shareholders. Trade late and make the green on this machine.

    check this out http://www.visa-ipo-date.com

  23. VISA IPO Information on March 18, 2008 at 6:31 am

    […] post on the Visa ipo. A good post on the Tim Horton’s […]

  24. mona on July 10, 2008 at 2:55 pm

    do you think its a good idea to buy visa stock now at about $78?

  25. Cannon_fodder on July 10, 2008 at 6:20 pm


    I’m monitoring it, too. It was as low as 73.89 today. I just have a sense that people will cut back their spending which will mean less revenue to Visa merchants, which is less ‘commission’ for Visa. More people are going bankrupt every day which usually means that they won’t be given a credit card for quite some time, also cutting into Visa’s revenue.

    Perhaps it will go a bit sideways (like it has for the last couple of months) until things start recovering next year.

  26. Mona on July 13, 2008 at 1:33 am

    what do you think of the stock icon (Iconix brand group)?
    and if i buy visa now at 78 or so do you think it will double by next year?
    what about the coh(coach stock) and the lulu (lululemon) stock? good buys for long term investment or no?

  27. David Cox on July 14, 2008 at 1:59 pm

    No one know where it will be a year from now.

    I think the expectation of doubling your investment in a year with nearly any investment is a little agressive. Yes, it is possible but I’d be perfectly happy with 15% sustained price growth over time. Set reasonable goals so if it doesn’t double, you are still content…just follow every article on Visa and you should be aware of anything that is coming about.

    I’d be sticking away from Coach now if I were you…people are tighetning their belts and aren’t as likely to buy an expensive purse as they were in ’06.

  28. […] VISA being a public company now, they are looking for ways to spread their reach and make more money. One way is to compete […]

  29. Greg on October 20, 2009 at 4:18 am

    Just clicked on the link for this article. I’m glad I didn’t buy into the Hype. The price went up, took a dive and has now recovered, but it’s nothing like what happened to MasterCard. Procrastination and laziness saved me again.

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