Sequoia Fund Says Blockchain Could Cut MasterCard Earnings

The operators of Sequoia Fund have predicted the rise of blockchain technology could put a damper on earnings at MasterCard.

AccessTimeIconFeb 29, 2016 at 10:33 a.m. UTC
Updated Sep 11, 2021 at 12:09 p.m. UTC

The New York-based operator of a major mutual fund has hinted it believes blockchain technology could be a threat to credit card network operators.

The comments came as part of Ruane, Cunniff & Goldfarb’s annual report on the performance of the Sequoia Fund, the firm’s consolidated portfolio offering. The Sequoia Fund currently holds stock in 10 publicly traded companies as part of its portfolio, with MasterCard accounting for 4.3% of its assets.

In the report, Sequoia praised MasterCard for its strong performance since its 2006 IPO, but indicated that it believes new technologies, including blockchain, will begin to affect the company’s value.

Sequoia wrote:

"MasterCard’s virtues are well-appreciated by the stock market but the evolution of mobile payment habits and the rise of blockchain ledger technology could pose longer term challenges to the company’s wildly profitable business model."

The fund has a storied track record among investors, returning three times more than the S&P 500 during its more successful runs.

In addition to MasterCard, other Sequoia Capital portfolio holdings include Berkshire Hathaway, O’Reilly Automotive and Alphabet, Google’s parent firm.

Correction: An earlier version of this article mentioned Sequoia Capital, a VC firm that is not connected to Sequoia Fund.

MasterCard image via Shutterstock

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Investing in the Future of the Digital Economy
October 18-19 | Spring Studio, NYC