The American Express Company (AXP), a non-cash payment provider, was able to recover the decrease in recent months thanks to a rally in November. As a result, the company’s shares are currently trading at approximately the same level (-4.43%) as they were at the beginning of the year, prior to the Covid-19 crisis.
News concerning the likely imminent mass vaccination was the reason for the American Express rally in November. The end of a pandemic means the return of consumer activity, more frequent transactions and a high level of credit activity for the payment provider.
The pandemic was a major challenge for American Express, despite the rise in e-commerce and cashless payments. In the first three quarters of the year the company said that revenue was down 29 percent, while profit was down 86 percent. A large part of the business of American Express is related to credit card issuance, and consumer lending was not a strong segment during the pandemic. A year earlier, the growth of American Express was driven by high volumes of consumer loans. In addition, the company’s revenue was negatively affected by the decline in air transport activity, one of American Express’ largest partners is Delta Air Lines, which last year provided American Express with up to 20 percent of the volume of consumer lending.
It is hard to predict how quickly the US economy will begin to recover after mass vaccination begins and the pandemic ends. However many investors anticipate high consumer market activity and the “unfreezing” of entire industries, such as air transport, restaurant industry, tourism, etc. At the same period due to many unrecognized factors that can influence consumer behavior, American Express shares can be expected to increase volatility in the coming quarters.
American Express Company (AXP) was stable with a loss of just 0.02% on Thursday to settle at $118.98.