MA · Forward model · Bear case
The Bear case, 20 quarters out
Each segment is projected from its own operating driver, rolled up into consolidated cash flow, and discounted back to a fair value per share. The assumptions below are editable — change them and every number on this page moves with them.
Mastercard reports ONE operating segment — Payment Solutions — and discloses TWO net-revenue categories inside it: Payment network and Value-added services and solutions. This model carries those two lines so VAS mix is visible. Every historical point is copied from the 8-K, 10-Q or earnings slides, or derived from two disclosures (Q3 2025 is the FY 10-K remainder after Q1, Q2 and Q4; Q4 2025 payment network is Q4 net revenue less disclosed VAS). Operating profit is not split, so the 61.1% adjusted operating margin is applied to both lines as an assumption. GDV and switched transactions are not a unit driver: assessments sit on volume, switching is a second count, and $6.0B of rebates are netted into the same line. Agent Pay and BVNK are named capabilities, not a third vertical. Calendar quarters; 2026 Q2 ended 30 June 2026. Segment 'EBITDA' here is the company adjusted operating margin. netCash is cash $11,291M less short-term debt $2,459M less long-term debt $22,184M. Capex 5% is H1 PPE plus capitalised software over H1 net revenue. Local profile price $484.09 and 893M shares are stale.
Cross-border and GDV slow, rebates keep outrunning assessments, and interchange or network-fee regulation bites. VAS growth fades toward the network rate. What this case does NOT assume is a loss of the dual-network duopoly or a 2008-style volume collapse. It says 2026 was the peak mix-shift year.
Latest: $10.12B (2031Q2E)
| Period | Value |
|---|---|
| 2025Q1 | $7.25B |
| 2025Q2 | $8.13B |
| 2025Q3 | $8.60B |
| 2025Q4 | $8.81B |
| 2026Q1 | $8.40B |
| 2026Q2 | $9.28B |
| 2026Q3E | $9.40B |
| 2026Q4E | $9.51B |
| 2027Q1E | $9.60B |
| 2027Q2E | $9.68B |
| 2027Q3E | $9.75B |
| 2027Q4E | $9.81B |
| 2028Q1E | $9.86B |
| 2028Q2E | $9.91B |
| 2028Q3E | $9.95B |
| 2028Q4E | $9.98B |
| 2029Q1E | $10.01B |
| 2029Q2E | $10.03B |
| 2029Q3E | $10.05B |
| 2029Q4E | $10.07B |
| 2030Q1E | $10.08B |
| 2030Q2E | $10.09B |
| 2030Q3E | $10.10B |
| 2030Q4E | $10.11B |
| 2031Q1E | $10.11B |
| 2031Q2E | $10.12B |
What drives each segment
Payment Network
Growth pathAssessments on gross dollar volume and fees for switching, net of rebates. $5,451M in the basis quarter, 59% of the company, +10% year over year. GDV $2.9T +8% local, switched transactions +9%, cross-border +12%. Rebates $5,997M grew 22%. Two volumes plus pricing plus rebates, so the projection is sequential growth on the reported net line.
Latest: $5.76B (2031Q2E)
| Period | Value |
|---|---|
| 2025Q1 | $4.43B |
| 2025Q2 | $4.95B |
| 2025Q3 | $5.18B |
| 2025Q4 | $4.92B |
| 2026Q1 | $4.95B |
| 2026Q2 | $5.45B |
| 2026Q3E | $5.50B |
| 2026Q4E | $5.55B |
| 2027Q1E | $5.58B |
| 2027Q2E | $5.61B |
| 2027Q3E | $5.64B |
| 2027Q4E | $5.66B |
| 2028Q1E | $5.68B |
| 2028Q2E | $5.70B |
| 2028Q3E | $5.71B |
| 2028Q4E | $5.72B |
| 2029Q1E | $5.73B |
| 2029Q2E | $5.74B |
| 2029Q3E | $5.74B |
| 2029Q4E | $5.75B |
| 2030Q1E | $5.75B |
| 2030Q2E | $5.75B |
| 2030Q3E | $5.75B |
| 2030Q4E | $5.76B |
| 2031Q1E | $5.76B |
| 2031Q2E | $5.76B |
Assumptions & reasoning
- A growth driver rather than GDV times a take rate, and that is the honest answer. Assessments are on volume, switching is a second count, and rebates of $5,997M sit in the same net line. Inventing a yield would look like Visa-unit models and would be fiction.
- Opening 3% is a Q3-on-Q2 trend, not the Q1-to-Q2 bounce. Combined with VAS +5% it prints about $9.63B in Q3, ~12% above Q3 2025 $8,602M — the low-double-digit floor. The high end is the named case.
- Margin 61.1% is the company adjusted operating margin. Mastercard does not publish category operating profit. Terminal 60% holds a network margin; mix shift lives on the VAS line.
- Q3 2025 $5,179M is FY2025 payment network $19,476M less Q1 $4,432, Q2 $4,945 and Q4 $4,920. Q4 $4,920M is Q4 net revenue $8,806M less disclosed VAS $3,886M.
Value-Added Services
Growth pathSecurity, authentication, engagement, insights, processing and gateway. $3,826M in the basis quarter, 41% of the company, +20% year over year and +18% currency-neutral. About 60% is network-linked. No customer count, so the projection is sequential growth on the reported net line.
Latest: $4.36B (2031Q2E)
| Period | Value |
|---|---|
| 2025Q1 | $2.82B |
| 2025Q2 | $3.19B |
| 2025Q3 | $3.42B |
| 2025Q4 | $3.89B |
| 2026Q1 | $3.45B |
| 2026Q2 | $3.83B |
| 2026Q3E | $3.90B |
| 2026Q4E | $3.96B |
| 2027Q1E | $4.02B |
| 2027Q2E | $4.07B |
| 2027Q3E | $4.11B |
| 2027Q4E | $4.15B |
| 2028Q1E | $4.18B |
| 2028Q2E | $4.21B |
| 2028Q3E | $4.24B |
| 2028Q4E | $4.26B |
| 2029Q1E | $4.28B |
| 2029Q2E | $4.29B |
| 2029Q3E | $4.31B |
| 2029Q4E | $4.32B |
| 2030Q1E | $4.33B |
| 2030Q2E | $4.34B |
| 2030Q3E | $4.35B |
| 2030Q4E | $4.35B |
| 2031Q1E | $4.36B |
| 2031Q2E | $4.36B |
Assumptions & reasoning
- About 60% of this line is network-linked, attached to switch transactions, tokens and card-not-present. That is mix inside VAS, not a third vertical. Agent Pay and BVNK are named on the calls and are not padded as delayed revenue.
- Opening 5% is below the trailing 18% CN on purpose. Q4 is the seasonal peak ($3,886M in 2025 Q4, then $3,450M in 2026 Q1). 18% CN into 2027 is the bull case.
- Margin 61.1% is the same company adjusted operating margin. Terminal 63% is a couple of points of software-like mix, not an 80% services fantasy.
- Q3 2025 $3,423M is FY2025 VAS $13,315M less Q1 $2,818, Q2 $3,188 and Q4 $3,886. Q4 $3,886M is from the Q4 2025 slides.
Where each case comes from
High End case — primary sources
The primary sources this case is built from — filings, calls and posts. Where they are claims by an interested party rather than disclosures, every number in the High End column is what happens if they are taken at face value.
Mastercard Q2 2026 earnings call, 30 July 2026
- Jul 30, 2026 As we look to the full year of 2026, we expect net revenue growth to be at the high end of low double-digit range on a currency-neutral basis, excluding inorganic activity.
- Jul 30, 2026 Although this is the same range we shared previously, we now expect to be higher within the range than our prior expectations, largely due to our stronger first half performance.
- Jul 30, 2026 We delivered above expectations with net revenue growth at 14% year-over-year, or 12% on a currency-neutral basis in the second quarter.
From cash flow to fair value
| Present value of free cash flow, 20 quarters | $64.79B |
| Terminal-year revenue | $40.44B |
| Terminal-year EBITDA | $23.36B |
| Exit multiple, on revenue | 7.0x |
| Terminal value | $283.05B |
| Discounted at 11.0% a year, terminal value becomes | $167.98B |
| Enterprise value | $232.77B |
| Net cash | -$13.35B |
| Equity value | $219.42B |
| Shares | 0.88B |
| Fair value per share | $248.49 |
| Against the current price of $591.73 | -58% |
10x terminal-year net revenue for a network whose VAS line has stopped compounding at 18% currency-neutral. Today the equity is ~$530B at $599.86 on 883M diluted shares, EV ~$543B after $13.4B of net debt, about 15.5x trailing sales of ~$35.1B and ~30x annualised adjusted $5.04. Visa is the other network and trades in the same neighbourhood. The exit is a de-rate, and deliberately. Discount rate is 9%, a quality-compounder cost of equity. Move the exit multiple before anything else: at 7x and at 14x the answer moves by more than a point of network growth. Rebates of $6.0B a quarter are already in the net-revenue base; they are not a separate haircut.
Read the other way round: at $591.73 the market is paying 19.6x terminal-year revenue, holding every other assumption on this page fixed. That is the number to argue about.
The projected path
| Quarter | Payment Network | Value-Added Services | Revenue | YoY | EBITDA | Capex | FCF | R40 | PV of FCF |
|---|---|---|---|---|---|---|---|---|---|
| 2026 Q3E | $5.50B | $3.90B | $9.40B | +9% | $5.42B | $461M | $3.97B | +51 | $3.87B |
| 2026 Q4E | $5.55B | $3.96B | $9.51B | +8% | $5.48B | $457M | $4.02B | +50 | $3.82B |
| 2027 Q1E | $5.58B | $4.02B | $9.60B | +14% | $5.54B | $454M | $4.07B | +57 | $3.76B |
| 2027 Q2E | $5.61B | $4.07B | $9.68B | +4% | $5.58B | $451M | $4.11B | +47 | $3.70B |
| 2027 Q3E | $5.64B | $4.11B | $9.75B | +4% | $5.62B | $448M | $4.14B | +46 | $3.64B |
| 2027 Q4E | $5.66B | $4.15B | $9.81B | +3% | $5.66B | $445M | $4.17B | +46 | $3.57B |
| 2028 Q1E | $5.68B | $4.18B | $9.86B | +3% | $5.69B | $442M | $4.20B | +45 | $3.50B |
| 2028 Q2E | $5.70B | $4.21B | $9.91B | +2% | $5.72B | $439M | $4.22B | +45 | $3.43B |
| 2028 Q3E | $5.71B | $4.24B | $9.95B | +2% | $5.74B | $436M | $4.24B | +45 | $3.36B |
| 2028 Q4E | $5.72B | $4.26B | $9.98B | +2% | $5.76B | $434M | $4.26B | +44 | $3.28B |
| 2029 Q1E | $5.73B | $4.28B | $10.01B | +1% | $5.78B | $432M | $4.28B | +44 | $3.21B |
| 2029 Q2E | $5.74B | $4.29B | $10.03B | +1% | $5.79B | $430M | $4.29B | +44 | $3.14B |
| 2029 Q3E | $5.74B | $4.31B | $10.05B | +1% | $5.80B | $428M | $4.30B | +44 | $3.06B |
| 2029 Q4E | $5.75B | $4.32B | $10.07B | +1% | $5.81B | $426M | $4.31B | +44 | $2.99B |
| 2030 Q1E | $5.75B | $4.33B | $10.08B | +1% | $5.82B | $424M | $4.32B | +44 | $2.92B |
| 2030 Q2E | $5.75B | $4.34B | $10.09B | +1% | $5.83B | $422M | $4.33B | +43 | $2.85B |
| 2030 Q3E | $5.75B | $4.35B | $10.10B | +0% | $5.83B | $421M | $4.33B | +43 | $2.78B |
| 2030 Q4E | $5.76B | $4.35B | $10.11B | +0% | $5.84B | $419M | $4.34B | +43 | $2.71B |
| 2031 Q1E | $5.76B | $4.36B | $10.11B | +0% | $5.84B | $418M | $4.34B | +43 | $2.64B |
| 2031 Q2E | $5.76B | $4.36B | $10.12B | +0% | $5.85B | $417M | $4.34B | +43 | $2.58B |
Every row is projected. A year-over-year change is shown only where the quarter it compares against exists — an em dash means there is no comparable quarter, not a flat year.
Model revisions
Assumptions are marked to reality as each quarter prints. Every change is appended here, with the fair value the model produced at the time, so the model's own history stays visible.
| Date | Changed | Fair value then | Note |
|---|---|---|---|
| 2026-08-25 | all | $562.11 | Initial model. Two verticals on the disclosed payment-network / VAS split, basis the June quarter at $9,277M, Q3 calibrated to the low-double-digit floor of the CN guide; high end is the named case. |