Stablecoin Disruption: Should Investors Sell Visa Stock?

In the wake of Senate approval for the GENIUS Act and rapid growth of stablecoins like USDC, Visa (V) faces heightened scrutiny. Should investors bail on the payments giant? Let's dissect its resilience through valuation, regulation, revenue diversification, and blockchain strategy—then weigh risks versus rewards.

Valuation Resilience: Overvalued or Undervalued?

Visa's EV/EBITDA ratio of 27.38 (as of June 2025) is 16% above its 10-year average, yet analysts argue it's justified by high-margin Value-Added Services (VAS). VAS revenue surged 22% YoY in Q2 2025 to $2.6 billion, now comprising 20% of total revenue—up from 15% in 2020. These recurring, low-overhead services (fraud detection, B2B platforms) operate at 50%+ margins, driving EBITDA margins to nearly 40%.

While the P/E ratio of 36.70 seems steep, Visa's $26 billion net cash and $30 billion buyback program offset valuation concerns. Analysts project 10–12% annual EBITDA growth, with a $420 price target (20% upside from June lows), citing undervaluation relative to its structural advantages.

Regulatory Shields: Visa's Fortress Moat

Stablecoins face $2.5 billion in regulatory compliance costs globally, including the U.S. GENIUS Act (requiring 100% reserve backing) and EU MiCA rules. Visa's litigation provisions ($992 million in Q2) highlight its ability to navigate regulations—a barrier to entry for smaller players.

Meanwhile, Visa's $15 trillion annual transaction volume dwarfs stablecoin volumes ($2 billion/day for USDC). Even if Walmart or Amazon launch in-house stablecoins, Visa's 0.1% transaction fee versus competitors' 2–3% charges ensures merchant loyalty. 84% consumer recognition versus USDC's 3% awareness further entrenches Visa's trust advantage.

Blockchain Integration: Co-Opting the Threat

Visa isn't fighting stablecoins—it's monetizing them. Partnerships like its BBVA pilot (issuing USDC on Ethereum) and Coinbase integration let Visa profit from crypto ecosystems while retaining control of its core network. Its “Tap to Everything” initiative and real-time settlement systems offer speed and security no stablecoin can yet match.

The VAS compounding at 20% annually (to hit $4 billion by 2026) and cross-border volume growth (13% YoY in Q2) underscore Visa's ability to evolve. AI-driven fraud detection reduced losses by 15% in Q2, while Visa Direct transactions rose 28%, proving its adaptability.

Near-Term Risks to Monitor

1. Stablecoin Adoption Spikes: If USDC or Diem gain mass adoption, Visa's 2–3% fee revenue could erode. Analysts estimate 0.5–1% annual revenue loss even in worst-case scenarios.
2. Global Recession: Cross-border volume (30% of revenue) could slump if trade slows. Visa's $15 billion cash reserves and 64% operating margin cushion this risk.
3. Regulatory Overreach: Excessive rules could slow innovation. Visa's $1.2 billion in lobbying since 2020 suggests it's prepared.

Long-Term Growth: A Decade of Dominance

Visa's $20 trillion untapped B2B market (via India's UPI and Mexican partnerships) and AI-driven efficiency (15% fraud reduction) position it to grow 8% EPS annually through 2026. Its 84% global brand recognition and 200-country network create $150 billion in switching costs—a moat no stablecoin can breach quickly.

Investment Thesis: Hold for the Long Game

Buy if:
- You believe Visa's VAS growth and cross-border tailwinds justify its valuation.
- You're comfortable with a 15% discount to its five-year P/E average (32 vs. current 27).

Avoid if:
- You're betting on stablecoins replacing Visa within five years (unlikely given regulatory and network hurdles).
- You prioritize short-term volatility (the stock dipped 8% in June amid regulatory fears but rebounded 5% in Q2 earnings).

Target Price: $380–$420 (20–25% upside). Hold for at least 3–5 years to capture VAS compounding and cross-border recovery.

Final Take

Stablecoins are a decade-long threat, not an immediate one. Visa's $633 billion market cap, $26 billion net cash, and 20% VAS growth make it a buy at current prices. For investors with a long horizon, Visa remains the payments ecosystem's backbone—stablecoin disruption or not.