- AXP Shares Drop 5% on Weak Third Quarter Revenue.
- The revenue projection for the entire year is adjusted to the lower part of the previous range.
- American Express beat earnings consensus by $0.20.
- Credit provisions and charge-offs increase moderately in the third quarter.
American Express Stock (AXP) fell more than 5% on Friday after the company reported third-quarter results. The company lowered its full-year revenue outlook from the 9% to 11% range to the lower end of that range, roiling market sentiment.
Despite reporting third-quarter revenue in line with consensus on Friday and raising full-year earnings guidance, AXP stock sold off immediately.
He Dow Jones Industrial Average (DJIA)of which American Express is a component, is trading 0.35% lower at the time of writing, while the NASDAQ gains 0.6%.
American Express Earnings News
The credit card issuer’s revenue rose about 8% year over year in the third quarter as billed business reached $387.3 billion.
“Based on our performance to date and the strong earnings our core business is generating, we are raising our full-year EPS guidance to $13.75 – $14.05 versus consensus of $13.28, from $13.30 – $13.80. earlier,” the New York-based company said.
The higher revenue seen on a year-over-year basis was attributed to growth in loan volumes, higher net interest income, stable customer spending and accelerated fee growth.
American Express acquired 3.3 million new card users in the quarter and said it saw a big increase in premium credit card customers. Loans to card members rose from $118 billion a year ago to $134.5 billion in the recent quarter.
The provision for credit losses increased from $1.23 billion in the prior-year quarter to $1.36 billion in the third quarter. Cancellations rose to 2.2% from 2% a year ago. However, it was 2.4% in the second quarter.
American Express Stock Forecast
AXP stock hit an all-time high on Thursday. But all that ended on Friday when shares fell sharply at the open. Shares initially fell through the upper line of a price channel that began in April. American Express stock originally broke that channel in mid-September.
However, the price action has largely recovered above the trend line, so it could act as support. Actually, the third quarter results were not bad at all, so AXP could consolidate here before finding new buyers.
AXP Stock Daily Chart
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
