Amex Shares Surge 75%: Millennials and Gen Z Drive Growth

American Express's Impressive Surge and Winning Strategies

American Express (AXP) has experienced a remarkable 75% surge in shares since late October, surpassing the S&P 500's 35% gain. This surge has valued Amex at more than double its competitors like Synchrony Financial and Discover Financial Services, with a forward P/E of 18x. Notably, Gen Z and millennials now constitute a third of Amex's US consumer billed services, with their spending rising by 13% year-on-year.

Amex exemplifies robust financial health with significantly low delinquency (1.2%) and write-off rates (2.1%) compared to rivalry. Despite a slightly below-anticipated growth in billed business, amounting to $388.2 billion in the second quarter, Amex plans to escalate marketing spending by 15% to $6 billion this year, given its consistent strong performance.

Key Takeaways

• American Express shares have surged 75% since October, outperforming the S&P 500's 35% gain.
• Gen Z and millennials now represent a third of Amex's US consumer billed services, with spending up by 13%.
• Amex maintains low delinquency (1.2%) and write-off rates (2.1%), significantly below competitors.
• Amex's billed business grew 5.5% year-on-year to $388.2 billion, despite slower growth concerns.
• Amex plans to increase marketing spending by 15% to $6 billion this year, targeting younger demographics.

Analysis

American Express's substantial surge, driven by robust financial health and successful targeting of Gen Z and millennials, impacts competitors negatively. This trend underscores a broader shift in finance, favoring digital and lifestyle perks over traditional travel rewards. Amex's aggressive marketing boost aims to solidify market share in the short term and might strain smaller rivals. In the long run, Amex's strategy has the potential to redefine consumer expectations in credit card benefits, setting a new industry standard.

Did You Know?

• Forward P/E Ratio: Trading at a forward P/E of 18x, it indicates that the market has high expectations for Amex’s future earnings growth compared to its competitors.
• Billed Business: The 5.5% year-on-year growth to $388.2 billion signifies an upsurge in card usage and consumer spending.
• Delinquency and Write-Off Rates: Amex's significantly low delinquency and write-off rates underscore its strong credit risk management and portfolio quality.