Visa IPO Brings Value, For Now

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From THESTREET.COM:

Visa starts trading Wednesday, and judging from the low valuation that underwriters accorded the stock as it heads out the gates, it's likely to find a grateful market awaiting it.

The credit-card titan priced its shares at $44 apiece late Tuesday in an offering that will raise $17.9 billion. There are several good reasons for investors to take to the stock -- which I outlined on Tuesday -- and now I'd like to flip things around and look at some potential concerns.

These aren't factors that will necessarily weigh down shares, but they're important for shareholders to keep in mind as they watch their investment:

1) Visa doesn't consider you a customer. If you have a Visa card and use it every day, you might be seduced into the invest-in-what-you-know mantra of yore.

But Visa's primary customers are banks -- the banks that issue your credit and debit cards, and the banks that handle merchant transactions. You are simply a cardholder -- at best a customer of Visa's customers.

This matters because Visa is treating its primary customers very, very well. As Laurie Kulikowski pointed out, $10.2 billion of the company's IPO proceeds will go to redeem shares held by member banks such as JPMorgan , Bank of America (BAC), Citigroup , and Wells Fargo . You cardholders get bubkes.