Mastercard's recent 10-Q filing provides a detailed overview of the company's financial condition and operations. Of particular note is the share repurchase program, which saw the company repurchase $1.992 billion worth of Class A common stock during the three months ending March 31, 2024. This activity reduced the remaining authorization for share repurchases to $12.15 billion, with an average price paid per share of $454.23 during the same period.
The company's exposure to market risk from changes in interest rates and foreign exchange rates is limited, with management monitoring risk exposures on an ongoing basis. Mastercard manages foreign currency and interest rate exposures through risk management activities, including the use of derivative financial instruments.
Regarding foreign exchange risk, Mastercard enters into foreign exchange derivative contracts to manage currency exposure associated with anticipated receipts and disbursements occurring in a currency other than the functional currency of the entity. The company also uses foreign currency derivative contracts to offset possible changes in the value of assets and liabilities due to foreign exchange fluctuations.
In terms of specific figures, a hypothetical 10% adverse change in the value of functional currencies could result in a fair value loss of approximately $416 million and $414 million on foreign exchange derivative contracts outstanding at March 31, 2024, and December 31, 2023, respectively. However, a hypothetical 10% adverse change in the value of functional currencies would not have a material impact on the fair value of short duration foreign exchange derivative contracts outstanding at the same dates.
Mastercard is further exposed to foreign exchange rate risk related to the translation of its net investment in foreign subsidiaries where the functional currency is different from the U.S. dollar reporting currency. The company may enter into foreign exchange derivative contracts to hedge a portion of its net investment in foreign subsidiaries.
In terms of interest rate risk, Mastercard's available-for-sale debt investments include fixed and variable rate securities that are sensitive to interest rate fluctuations. However, a hypothetical 100 basis point adverse change in interest rates would not have a material impact on the fair value of the company's investments at March 31, 2024, and December 31, 2023.
Today the company's shares have moved -1.3% to a price of $445.39. Check out the company's full 10-Q submission here.
