Is Visa's Selloff Overdone? A Deep Dive into Stablecoin Fears and Buying Opportunities

The recent selloff in Visa (V) has sparked debates about whether fears over stablecoin competition are overblown. On June 13, 2025, Visa's stock dropped 5.23% after reports that Walmart and Amazon were exploring proprietary stablecoins to bypass traditional payment networks. While the short-term pain is clear, the question remains: Is this decline a justified reaction to existential threats—or an overreaction that creates a buying opportunity for long-term investors? Let's dissect the risks, valuation, and Visa's defenses.

The Stablecoin Threat: Overhyped or Existential?

The fear centers on stablecoins—cryptocurrencies pegged to fiat currencies—disintermediating Visa by enabling retailers to process payments directly. If Walmart or Amazon issued their own stablecoins, they could reduce reliance on Visa's network, cutting into transaction fees. However, this scenario is still years away from materializing at scale.

Visa's dominance in cross-border transactions and its vast ecosystem of merchants, banks, and tech partners remain formidable barriers. Even if stablecoins gain traction, Visa's partnerships with blockchain platforms (e.g., its Tokenized Asset Platform) position it to adapt. Moreover, stablecoins face regulatory hurdles: the proposed GENIUS Act aims to subject them to strict oversight, which could slow adoption.

Visa's Defenses: Recurring Revenue and Strategic Innovation

While headlines focus on stablecoin threats, Visa's financials tell a different story. Its Value-Added Services (VAS)—which include fraud prevention, AI-driven analytics, and loyalty programs—now contribute over 30% of total revenue, with 17% YoY growth in early 2025. These high-margin services are recurring and less susceptible to transaction volume shifts.

Additionally, Visa's investments in AI and blockchain (e.g., partnerships with Klarna and Neural Concept) aim to future-proof its ecosystem. Its Visa Intelligent Commerce platform, which automates cross-border payments for businesses, exemplifies its pivot to enterprise solutions. These moves suggest Visa isn't just a transaction processor—it's evolving into a fintech infrastructure provider.

Valuation: Is the Dip a Bargain?

To assess whether Visa is oversold, let's analyze its valuation multiples:

1. EV/EBITDA: As of May 2025, Visa's EV/EBITDA ratio was 27.38, up from its 12-month average of 25.25 but still below Mastercard's 30.10. Historically, Visa's EV/EBITDA has averaged 24.56 over five years. While elevated, this multiple reflects its premium profitability and growth in VAS.

1. P/E Ratio: Visa's trailing P/E of 36.25x is high compared to its five-year average of 24.56x. However, analysts project 12.84% CAGR in EPS through 2028, which could justify the premium.

2. Sector Comparison: Visa's EV/EBITDA remains 63.84% above the credit services industry median, but this reflects its leadership in cross-border payments and innovation.

The key question: Is the valuation justified? While risks like EU antitrust fines or Asia-Pacific volume declines are valid, Visa's fortress balance sheet ($24.6B in cash) and 10.49% year-to-date return in 2025 suggest it's weathering storms better than peers.

Regulatory Risks: Manageable or Catastrophic?

The EU's antitrust probe into Visa's fee structures is a wildcard. If regulators impose fee caps, European margins could compress. However, Visa's global diversification (only 28% of revenue comes from Europe) and cross-border dominance (13% YoY volume growth in Q2 2025) provide buffers. Proactive engagement with regulators—such as its recent lobbying efforts—also hints at mitigation strategies.

Conclusion: A Buying Opportunity for Patient Investors

Visa's selloff may have overreacted to speculative stablecoin threats while underappreciating its moat and innovation. At a $352.85 share price (as of June 13), Visa trades at a 11.18% six-month gain and 29.89% annual return, suggesting long-term resilience.

Investment Thesis:
- Buy: For long-term investors, Visa's P/E and EV/EBITDA multiples—while elevated—align with its growth trajectory in VAS and AI. The stablecoin threat is years from materializing, and Visa's diversified revenue streams offer a cushion.
- Hold: For short-term traders, regulatory risks and macroeconomic uncertainties (e.g., Asia-Pacific slowdowns) warrant caution.
- Avoid: Only if you believe stablecoin adoption will decimate Visa's transaction volumes within 12–18 months—a scenario requiring Walmart/Amazon to disrupt decades-old infrastructure overnight.

In short, Visa's valuation dip presents a compelling entry point for investors willing to bet on its ability to evolve, not just survive, in the digital payments era.

Final Note: Always consider your risk tolerance and consult a financial advisor before making investment decisions.