Why American Express Stock Fell 6.5% Friday Morning
Key Points
American Express beat Q2 earnings estimates but missed revenue expectations by a hair.
Management raised full-year revenue guidance to 10% but kept EPS guidance unchanged.
At 15.9 times forward earnings, American Express trades at a discount to the other payment card titans.
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Shares of American Express (NYSE: AXP) are down 6.5% at 10:25 a.m. ET. The payment card veteran reported Q2 2026 results last night, beating Wall Street's bottom-line expectations but falling just short of analyst consensus on revenues. The market's focus on a slight revenue miss seems odd, given that management also raised its full-year revenue guidance.
Q2 by the numbers
American Express posted 10% year-over-year revenue growth, landing at $19.64 billion. The average analyst was looking for $19.69 billion. Earnings rose 11% to $4.53 per diluted share. Here, the Street consensus pointed to $4.40 per share.
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CEO Stephen Squeri called Q2 "another excellent quarter" with better-than-expected member spending growth. The company raised its full-year revenue growth guidance from 9-10% to 10%. It's a small boost, but half a percent makes a difference when you're managing $456 billion of card charges in a single quarter.
Image source: The Motley Fool.
Growth now, profits later
So why are American Express shares plunging today, despite a solid earnings surprise and raised full-year revenue guidance? Well, the additional sales dollars will not trickle down to the bottom line. Management is reinvesting the extra capital into growth-oriented moves.
That's already going on. For example, higher fees for the Platinum Card contributed to the double-digit revenue growth in the first half, but the same program also lifted operating expenses by 12%. That's the cost of offering card perks that customers actually use.
Credit quality remains solid. Provisions for credit losses dropped to $1.1 billion from $1.4 billion a year ago, and the net write-off rate held flat at 2%. Card Member spending growth of 9% marked the highest rate in three years on a currency-adjusted basis.
At 15.9 times forward earnings, with credit quality strengthening and spending growth accelerating, this drop looks like a chance to buy a premium business at a discount. Use cash, not a credit card.
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American Express is an advertising partner of Motley Fool Money. Anders Bylund has positions in American Express. The Motley Fool has positions in and recommends American Express. The Motley Fool has a disclosure policy.
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