Will Mastercard Stock Decline 40% If There Is A U.S. Recession?
Question: How would you react if you held Mastercard stock (NYSE: MA) and its value fell by 40% or more in the coming months? Although this might seem extreme, such an occurrence has happened before and could very well repeat itself. To be sure, Mastercard stock has fared better than the broader market this year, rising by roughly 4% since early January, compared to the S&P 500, which has declined by 2% over the same timeframe. Mastercard has benefited from stronger-than-expected Q4 2024 results, led by rising payment volume as well as higher cross-border volumes. However, there could be multiple headwinds in the near term. The overall market sentiment has been negative amid increasing concerns about a U.S. recession following tariffs imposed by President Donald Trump on major trading partners. This could have a significant impact on Mastercard, given that its business is largely tied to consumer spending and international travel volumes.
Here’s the point: The key takeaway is that during a downturn, Mastercard stock might incur meaningful losses. Data from 2020 indicates that MA stock lost about 41% of its value in only a few quarters while also seeing a peak-to-trough decline of about 29% during the 2022 inflation shock, faring a tad worse than the S&P 500. This raises the question: Could the stock see a sell-off and reach as low as $320 if a similar situation were to unfold? Naturally, individual stocks are generally more volatile than diversified portfolios. Therefore, if you are looking for growth with reduced volatility, you might consider the High-Quality portfolio, which has outperformed the S&P 500 and generated returns of over 91% since its inception.
President Donald Trump’s aggressive tariff measures – including a 20% tariff on Chinese imports and 25% on imports from Canada and Mexico, along with tighter immigration restrictions – have raised concerns that inflation might return. All of this suggests that the U.S. economy could encounter significant difficulties and even a recession – our analysis here on the macro picture. In fact, during an interview earlier this month, the President did not rule out the possibility that new tariffs might trigger a recession. When taking into account the heightened uncertainty from the Trump administration’s policies, these risks become especially critical. The ongoing Ukraine–Russia war and global trade tensions further obscure the economic outlook. Tariffs increase import costs, leading to higher prices, reduced disposable income, and weaker consumer spending.
This could impact Mastercard in multiple ways. Higher prices may lead consumers to cut back on discretionary spending, potentially lowering transaction volumes on the company’s network. If a recession follows, job losses and lower incomes could further weaken spending and payment volumes. Businesses facing higher costs might also tighten their budgets, leading to lower corporate spending and fewer business-related transactions. If economic uncertainty slows travel, Mastercard’s high-margin cross-border payments – which have been growing at a robust clip – may also take a hit. This could hurt revenues and margins.
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How resilient is MA stock during a downturn?
MA stock has seen an impact that was slightly better than the benchmark S&P 500 index during some of the recent downturns. Worried about the impact of a market crash on MA stock? Our dashboard How Low Can Mastercard Stock Go In A Market Crash? has a detailed analysis of how the stock performed during and after previous market crashes.
Inflation Shock (2022)
• MA stock fell 28.6% from a high of $396.75 on 2 February 2022 to $283.38 on 12 October 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 11 July 2023
• Since then, the stock has increased to a high of $576.31 on 2 March 2025 and currently trades at around $550
Covid Pandemic (2020)
• MA stock fell 41.0% from a high of $344.56 on 19 February 2020 to $203.30 on 23 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 25 August 2020
Global Financial Crisis (2008)
• MA stock fell 62.8% from a high of $32.00 on 2 June 2008 to $11.92 on 20 January 2009, vs. a peak-to-trough decline of 56.8% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 3 August 2011
Premium Valuation
At its current price of about $545 per share, MA is trading at approximately 34x consensus 2025 earnings, which seems somewhat expensive. The company’s revenue growth, while good, is not exactly stellar. Consensus projects revenue growth rates of about 11% each year over FY’25 and FY’26. Mastercard’s operating expenses have also been rising in recent years. Besides this, there are regulatory risks, too. The Credit Card Competition Act, a proposed legislation that could decrease merchant fees and boost competition within the payments sector, could potentially challenge the dominant market position held by Mastercard and key rival Visa in the U.S.
Given this potential slowdown in growth and the broader economic uncertainties, ask yourself the question: do you intend to hold on to your MA stock now, or will you panic and sell if it begins dropping to $320 or even lower? Holding onto a declining stock is never easy. Trefis collaborates with Empirical Asset Management—a Boston area wealth manager—whose asset allocation strategies yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Empirical has incorporated the Trefis HQ Portfolio into its asset allocation framework to provide clients with better returns and less risk compared to the benchmark index—a less turbulent ride, as shown in HQ Portfolio performance metrics.
| Returns | Mar 2025 MTD [1] |
2025 YTD [1] |
2017-25 Total [2] |
| MA Return | -5% | 4% | 454% |
| S&P 500 Return | -3% | -2% | 158% |
| Trefis Reinforced Value Portfolio | -3% | -5% | 585% |
[1] Returns as of 3/26/2025
[2] Cumulative total returns since the end of 2016
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