American Express Earnings: Card Members Keep Spending, Stock Falls

As American Express (AXP) reported its fourth-quarter earnings, investors were left with a mixed bag of news. On one hand, the company's card members continued to spend at a healthy clip, with total billed business up 8% year-over-year. On the other hand, the stock price fell, despite the company's upbeat outlook for 2025. So, what's going on with American Express, and why is the stock falling?



First, let's take a look at the spending trends. American Express card members spent a combined $1.46 trillion on their cards in 2023, up from $1.34 trillion in 2022. This increase was driven by a 13% jump in airline spending and a 19% increase in front-of-cabin plane tickets. Additionally, spending by Millennials and Gen Z rose by 16%, indicating that the company's efforts to attract younger customers are paying off.



Now, let's talk about the elephant in the room: the stock price. Despite the strong earnings report and the company's optimistic outlook for 2025, American Express' stock price fell in premarket trading. This could be due to a few factors:

1. Market Sentiment: The overall market sentiment may be influencing the stock price. If investors are feeling cautious or pessimistic about the broader market, they may be selling off stocks across the board, including American Express.
2. Interest Rates: American Express is a financial services company, and its stock price is sensitive to interest rates. If investors expect interest rates to rise, they may be selling off financial stocks in anticipation.
3. Competition: American Express faces stiff competition from other credit card companies, such as Visa and Mastercard. If these competitors are performing better or offering more attractive rewards, investors may be shifting their money away from American Express.



In conclusion, American Express' earnings report showed that its card members continue to spend at a healthy clip, driving the company's revenue growth. However, the stock price fell in premarket trading, likely due to a combination of market sentiment, interest rates, and competition. As an investor, it's essential to stay informed about the company's performance and the broader market trends to make informed decisions about your portfolio.