American Express (AXP) stock experienced a significant drop of over 5% after reporting its third-quarter results. The company also revised its full-year revenue guidance to the lower end of the prior range, causing concern among investors. Despite meeting Q3 revenue expectations and increasing full-year earnings guidance, AXP shares saw a sell-off in the market.
The Dow Jones Industrial Average (DJIA), which includes American Express as a constituent, also experienced a slight decline, while the NASDAQ saw gains. American Express reported an 8% year-over-year increase in revenue in the third quarter, fueled by growth in loan volumes, higher net interest income, stable customer spending, and accelerated fee growth.
The company acquired 3.3 million new card users in the quarter and saw a significant increase in premium credit card customers. Card member loans also rose from $118 billion to $134.5 billion year over year. Additionally, provisions for credit losses increased from $1.23 billion to $1.36 billion, while write-offs rose to 2.2% from 2% year over year.
Despite hitting an all-time high just the day before, AXP stock quickly dropped following the earnings report. The stock fell through a price channel that began in April but has since recovered above the trendline. It is possible that the stock may consolidate before finding new buyers, as the Q3 results were not necessarily poor.
In conclusion, American Express experienced a drop in its stock price after reporting its third-quarter results. While revenue increased year over year, the company revised its full-year revenue guidance down to the lower end of the range, leading to a sell-off in the market. However, the company remains optimistic about its performance and raised its full-year earnings guidance. Investors will be closely watching how the company navigates the challenges ahead and if it can continue its growth trajectory.
