Visa faces antitrust lawsuit: Stock price in nosedive

Visa's stock price experienced a significant decline today following reports that the U.S. Department of Justice (DOJ) is preparing an antitrust lawsuit against the financial services company. The news caused the stock price to drop by 4%. In recent years, we have seen nearly every major technology company sued by the U.S. government. Therefore, it is not surprising that Visa, which possesses one of the strongest economic strongholds in the business world, is now also coming under the scrutiny of the DOJ. As reported by the New York Times, the DOJ plans to sue Visa for excluding competitors. It is alleged that Visa penalizes customers who use alternative payment processing services. The lawsuit could be filed as early as Tuesday and follows a years-long investigation. In 2020, the DOJ had already prevented Visa from acquiring the fintech company Plaid. Since the lawsuit has not yet been filed, the impacts on Visa's business are difficult to estimate. At best, it could just be a legal nuisance; at worst, it could result in billions of dollars in fines and hinder Visa's expansion. However, it will not be easy to shake Visa's dominance in the credit card market. Together with Mastercard, Visa forms virtually a duopoly, and the company's merchant network would be difficult to recreate from scratch. In 2022, Visa held an estimated 52% of credit card transaction volume in the U.S., equating to $2.84 trillion. Operating margins of over 60% also suggest a quasi-monopolistic position. Continue to monitor the market, as Visa's shares are expected to react again once the lawsuit is filed. If you are considering buying Visa shares, take note of the following: The analyst team at the Motley Fool Stock Advisor recently identified ten stocks that they believe currently offer the best buying opportunities. Visa is not among them. Some of these stocks have yielded enormous returns in the past, such as Nvidia since April 15, 2005—a $1,000 investment would have increased to $712,454 by now! Stock Advisor offers investors an easy-to-understand success strategy, including guides for building a portfolio, regular analyst updates, and two new stock recommendations per month. Since 2002, the Stock Advisor service has more than quadrupled the returns of the S&P 500.