25 May 2006: Mastercard goes public below its target
Mastercard began trading on the NYSE on May 25, 2006 after pricing its shares at $39, below the expected range. Investors worried about lawsuits over card fees. They overlooked a simple business: a toll on a growing share of the world's payments, with little credit risk because banks lend the money. The stock went on to rise many times over in the years that followed.
The lesson: Legal worries can create bargains in businesses whose fundamental economics remain excellent.
What it meant for investors
$1,000 in Mastercard at the start of 2007 → $56,000 today, vs $4,789 in the S&P 500.
We start the clock at the start of 2007, the first year in our price data after the event. That is 56.0 times the money, and $51,211 more than a plain index fund made over the same years.
What Mastercard teaches: Skepticism around a new listing, especially over legal risk, can create long-term opportunities when the underlying business economics are excellent.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2007 | $10.00 | $56,000 | $4,789 |
| 2008 | $22.00 | $25,455 | $4,626 |
| 2010 | $26.00 | $21,538 | $6,071 |
green = beat the S&P 500 · red = lost money
What if you bought Mastercard? Every starting year and the full story →
Could you have called it at the time? The wheel picks the year, you pick the position, ten seconds a pick.
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