American Express Company (NYSE: AXP) has continued its profitable growth trajectory in recent years amid stable demand for its services and strong consumer engagement, despite a slowdown in spending among small businesses, a key segment of the credit card firm’s client base. The company delivered record performance last year, capitalizing on strong holiday spending from its consumer and commercial customers.
Stock Dips
The company’s stock set a record in January this year, before pulling back and slipping to a seven-month low this week. The shares have lost about 18% since the beginning of 2025. The downturn accelerated last week — aligning with the broad market selloff — after the Trump administration imposed new import tariffs. It is expected that economic uncertainties and recession fears will continue to weigh on investor sentiment in the near term. The strain on people’s spending power and family budgets does not bode well for AXP.
Market watchers are bullish about the company’s prospects in fiscal 2025, forecasting a 7.2% growth in first-quarter revenues to $16.94 billion. The consensus earnings estimate for the March quarter is $3.48 per share, compared to $3.33 per share in Q1 2024. The report is slated for release on Thursday, April 17, at 7:00 am ET.
Holiday Spend
In the fourth quarter of 2024, revenues, net of interest expense, increased 9% year-over-year to $17.2 billion. On an FX-adjusted basis, the topline grew 10%, driven mainly by strong card member spending, higher net interest income, and accelerated card fee growth. That translated into an increase in Q4 net income to $2.2 billion or $3.04 per share from $1.9 billion or $2.62 per share a year earlier. Earnings beat expectations while revenue came in line with estimates. Fourth-quarter billings growth accelerated to 8% overall, reflecting strong holiday spend.
From American Express’ Q4 2024 earnings call:
“We’re confident that we will continue to bring in large numbers of new premium customers, especially millennial and Gen Z consumers and small businesses, while also maintaining high growth across our international business. In looking at the external marketplace, we continue to see strategic opportunities to sustain our growth. For example, in the U.S., fee-based consumer premium cards are the fastest-growing part of the industry, and we have about 25% of those cards, indicating a continued upside opportunity.“
Outlook
A few weeks ago, the Amex leadership said it expects revenue growth of 8-10% for fiscal 2025, and earnings per share in the range of $15.00 to $15.50. The optimistic guidance reflects the uptick in card spending in recent months, mainly among millennials and Gen Z who spent more on leisure and travel. However, the tariff-induced trade tensions can negatively impact Amex’s transaction volumes, as the economic uncertainty leads to lower discretionary spending, especially in activities like entertainment and travel.
On Wednesday, American Express shares opened higher and made steady gains in the early hours. The stock was trading up 5% in the afternoon but stayed below its 52-week average value of $266.64.
