Shares of Visa Inc. retreated sharply in Friday's trading session, closing down 3.1% at $314.08. The decline significantly outpaced the marginal gains seen in the major U.S. equity indices, casting a spotlight on the payment network giant just before an extended market closure for the Presidents Day holiday. Trading activity for the stock ranged between $312.82 and $326.48 during the session, a level that remains substantially below its 52-week high of $375.51. U.S. financial markets are closed Monday and will resume regular trading on Tuesday, February 17, 2026.
Litigation-Linked Capital Structure Move
The primary catalyst for the stock's weakness appears to be a new regulatory filing detailing a significant capital structure initiative. Visa's board has approved a subsequent exchange offer for its outstanding Class B common stock. Crucially, this offer is not unconditional; it is contingent upon meeting specific milestones directly tied to the resolution of the protracted "swipe-fee" or interchange fee litigation in the United States.
According to the filing with the Securities and Exchange Commission, the company must first see a reduction of at least 50% in its estimated liability for unresolved U.S. interchange reimbursement claims. This figure needs to fall from approximately $49.6 billion as of October 1, 2023, to a projected $39.4 billion by October 1, 2025. Visa indicated that recent and anticipated dismissals in key cases, including one involving 7-Eleven pending in New York courts, are expected to help push the estimated liability below this critical threshold within the coming weeks.
The Significance of Class B Shares
The proposed exchange focuses on Class B shares, which carry distinct characteristics and restrictions compared to the company's other share classes. These shares are largely illiquid, as transfers are prohibited until a predetermined escrow period concludes. This contrasts with Class C shares, whose transfer restrictions were lifted in August 2024. The mechanics of the conversion from Class B to Class A shares are also designed to allocate costs associated with the company's U.S. retrospective responsibility plan specifically to Class B holders, effectively diluting their as-converted share count when litigation escrow accounts are funded.
Once the liability threshold is met, Visa plans to file a Form S-4 registration statement with the SEC before formally launching any exchange offer to shareholders. This process introduces a layer of regulatory review and timing uncertainty that is outside the company's direct control.
Broader Market and Regulatory Context
Friday's sell-off occurred despite a generally calm macroeconomic backdrop. Major indexes posted slight gains after January inflation data came in slightly cooler than analyst forecasts, providing what one chief investment officer termed "a bit of good news" heading into the long weekend. This suggests Visa's decline was largely idiosyncratic, driven by its specific litigation and capital structure news.
Regulatory scrutiny of card network fees remains intense on both sides of the Atlantic. In Europe, where Visa handles a significant portion of card payments, central bank officials have highlighted a strategic need to reduce dependency on international payment giants as the continent develops its digital euro project. In the United States, a newly proposed settlement between Visa, Mastercard, and merchants in the long-running antitrust dispute over interchange fees is still awaiting judicial approval, keeping the legal overhang alive.
What Investors Are Watching Next
Attention now turns to several near-term catalysts. The immediate focus for Visa shareholders is any update on the Form S-4 filing and the court proceedings the company has identified as triggers for its exchange terms. More broadly, the Federal Reserve is scheduled to release the minutes from its late-January policy meeting on Wednesday, February 18, at 2:00 p.m. Eastern Time, which will be parsed for clues on the interest rate trajectory.
The path forward for Visa's share exchange plan remains fraught with potential delays. Any setbacks in the courts or a more stringent review by securities regulators could prolong the timeline, likely keeping the stock under pressure as the multi-billion dollar litigation cloud persists. The company's ability to navigate these legal complexities continues to be a central determinant of its equity performance and capital allocation strategy.
