Will Visa Stock Decline 35% On Recession Concerns?
Question: How would you react if you held Visa stock (NYSE: V) and its value fell by 35% or more in the coming months? Although this might seem extreme, such an occurrence has happened before and could very well repeat itself. Visa stock has been a mixed performer of late. To be sure, Visa stock has done well this year, rising by roughly 8% since early January, compared to the S&P 500 which has declined by 4% over the same timeframe. Visa has benefited from stronger-than-expected Q1 FY’25 results (Sept. year), amid rising payment volume as well as higher cross-border volumes. However, there could be multiple headwinds in the near term. The overall market is undergoing a meaningful sell-off, spurred by 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 Visa, 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, Visa stock might incur meaningful losses. Data from 2020 indicates that V stock lost about 35% of its value in only a few quarters while also seeing a peak-to-trough decline of about 25% 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 $220 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, last week, during an interview, 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 Visa in multiple ways. Higher prices may lead consumers to cut back on discretionary spending, potentially lowering transaction volumes on Visa’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, Visa’s high-margin cross-border payments may also take a hit. This could hurt Visa’s revenues and margins.
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How resilient is V stock during a downturn?
Visa stock has been more resilient than the benchmark S&P 500 index during some of the recent downturns. While investors have their fingers crossed for a soft landing by the U.S. economy, how bad can things get if there is another recession? Our dashboard How Low Can Stocks Go During A Market Crash captures how key stocks fared during and after the last six market crashes.
Inflation Shock (2022)
• Visa stock fell 24.5% from a high of $235.42 on 2 February 2022 to $177.65 on 2 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 30 June 2023
• Since then, the stock has increased to a high of $362.71 on 2 March 2025 and currently trades at around $340
Covid Pandemic (2020)
• Visa stock fell 36.4% from a high of $213.31 on 19 February 2020 to $135.74 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 28 August 2020
Global Financial Crisis (2008)
• Visa stock fell 52.1% from a high of $22.12 on 7 May 2008 to $10.61 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 18 December 2009
Premium Valuation
At its current price of about $340 per share, V is trading at approximately 31x consensus 2025 earnings, which seems somewhat expensive. The company’s revenue growth is also not exactly stellar, with the consensus projecting growth rates of about 10% each year over FY’25 and FY’26. Moreover, Visa has also been in the crosshairs of antitrust authorities of late. Last year, the U.S. Justice Department accused Visa of illegally operating a monopoly in the debit market in the U.S. by unfairly suppressing competition. This also poses a risk to Visa stock.
Given this potential slowdown in growth and the broader economic uncertainties, ask yourself the question: do you intend to hold on to your Visa stock now, or will you panic and sell if it begins dropping to $150, $125, 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] |
| V Return | -6% | 8% | 362% |
| S&P 500 Return | -5% | -4% | 153% |
| Trefis Reinforced Value Portfolio | -6% | -8% | 551% |
[1] Returns as of 3/20/2025
[2] Cumulative total returns since the end of 2016
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