Visa's Defensive Play: Why the Stablecoin Threat is Overblown and the Dip is a Buying Opportunity

Amid fears that stablecoins could upend traditional payment networks, Visa's stock has dipped nearly 8% since late May. But a closer look at its valuation, regulatory advantages, and diversified revenue streams reveals this sell-off is overdone. Visa remains a fortress of financial innovation, with its high-margin Value-Added Services (VAS) and cross-border dominance insulating it from near-term disruption. Regulatory headwinds for stablecoins and the slow pace of crypto adoption suggest investors have ample time to capitalize on this dip.

Valuation: A Bargain for Long-Term Growth?

Visa's current EV/EBITDA ratio of 27.38 (as of June 2025) sits slightly above its 10-year median of 23.91 but remains reasonable given its growth trajectory. While its P/E ratio of 36.70 may appear rich, this metric is less instructive than EV/EBITDA, which accounts for the company's $26 billion in net cash. Crucially, Visa's valuation reflects its shift toward higher-margin VAS, which grew 22% year-over-year in Q2 2025 to $2.6 billion. These services—ranging from fraud analytics (via its Featurespace acquisition) to unified checkout platforms—generate recurring revenue with minimal incremental costs.

The market may be underappreciating this transition. VAS now accounts for roughly 20% of total revenue, up from 15% in 2020, and its growth is accelerating. Visa's EBITDA margins, already near 40%, could expand further as VAS scales, making its current valuation a bargain for investors willing to look beyond near-term crypto jitters.

Stablecoin Hurdles: A Decade-Long Marathon, Not a Sprint

The fear that Visa will be supplanted by stablecoin networks like USD Coin or Dai is premature. Regulatory uncertainty—exemplified by the GENIUS Act, which would require stablecoins to be backed by U.S. government bonds—could delay mass adoption for years. Even if passed, transitioning trillions of dollars in existing payment volume to a new regulatory framework would take time.

Meanwhile, consumer habits remain sticky. Visa processes $15 trillion in annual transactions, underpinned by its dominance in cross-border commerce (30% of its revenue). Stablecoins may appeal to crypto natives, but the average consumer still relies on Visa's global acceptance, fraud protection, and interoperability with existing banking systems.

Visa's Proactive Play: Integrating, Not Surrendering

Far from sitting idle, Visa is leveraging blockchain to its advantage. Its partnerships with crypto wallets (e.g., Coinbase) and its “blockchain-as-a-service” offerings for banks allow it to profit from the crypto ecosystem while retaining control over its core network. CEO Ryan McInerney's emphasis on “payments innovation” suggests Visa sees stablecoins as a channel, not a competitor.

This strategic flexibility is underappreciated. While Bitcoin's volatility makes it a poor payment tool, Visa's role as a bridge between fiat and stablecoin ecosystems positions it to profit from both worlds.

The Bottom Line: A Strong Buy for the Next Decade

Visa's current selloff creates a rare opportunity. Its EV/EBITDA multiple is 33% higher than the Credit Services industry median, but this premium is justified by its superior growth and defensible moat. With VAS revenue compounding at 20% annually, and cross-border volumes rebounding post-pandemic, Visa's EBITDA could grow 10–12% annually for the foreseeable future.

Investors fixated on stablecoin risks are ignoring Visa's ability to adapt. Regulatory hurdles and consumer inertia ensure disruption will be gradual, giving Visa time to evolve. For long-term holders, this dip is a buy—preferably with a 3–5 year horizon.

Rating: Strong Buy
Price Target: $420 (20% upside from June 2025 lows)
Risk Factors: Sudden regulatory crackdowns on crypto, global economic recession, or a surge in stablecoin adoption ahead of expectations.

In a world where fear of the unknown drives markets, Visa's fundamentals—and its ability to turn disruption into opportunity—remain unshaken.