Here's Why Shares of American Express Are Plummeting
Key Points
Spending on marketing to attract and retain members rose 12% in the quarter.
Management expects expenses to be 10% higher in the second half of the year.
- 10 stocks we like better than American Express ›
Shares of American Express (NYSE: AXP) plummeted more than 6% in last Friday's morning trading. What's going on? Well, the iconic charge card company issued its second-quarter results, and while revenue and earnings growth were strong, rising expenses worried investors.
Amex reported revenue net of interest expense of $19.6 billion, 10% higher than the same period a year ago. That was driven by higher card member marketing expenses -- up about 9% -- during the quarter. Earnings per share rose 11%, to $4.53, about $0.12 higher than analysts expected.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
But there was one thing the market really didn't like. The company said expenses grew 12% year over year in the quarter to $14.5 billion, from $12.9 billion a year ago. That higher level will continue through the end of 2026, CFO Christophe Le Caillec said on a call with analysts.
He expects marketing expenses to be 10% higher in the second half of the year. The company has been increasing its marketing spending on several card products to attract and retain members.
Image source: Getty Images.
Amex has had success with younger consumers, including millennials and Gen Z, who are its fastest-growing group. That's a real positive. Yet, the higher marketing expenses -- both in the second quarter and for the remainder of the year -- could indicate that those new memberships are increasingly expensive for the company to obtain.
Should you buy stock in American Express right now?
Before you buy stock in American Express, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and American Express wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $377,990!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,269,518!*
Now, it’s worth noting Stock Advisor’s total average return is 896% — a market-crushing outperformance compared to 206% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of July 27, 2026.
American Express is an advertising partner of Motley Fool Money. Matthew Benjamin has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends American Express. The Motley Fool has a disclosure policy.
Recommended Articles
