American ExpressAXP

just dealt a winning hand in its latest earnings report, but Wall Street seems to be folding. The credit card giant reported third-quarter revenue of $16.64B, an 8% jump from the previous year. This growth was driven by higher net interest income from more loans, steady increases in card member spending, and faster growth in card fee proceeds. However, despite these positive numbers, the stock dipped ~3% on Friday.

• Amex’s affluent-flavored clientele boosted credit card spending by 6% in the third quarter — with notable upturns in dining (7%) and airline expenditures (6%).
• The organization’s card member loan portfolio grew to $134.5B, but its consolidated provisions for credit losses also rose to $1.4B, up from $1.2B the previous year.

The benefit express: Amex’s strategy of courting younger spenders is paying off handsomely, with CEO Steve Squeri highlighting that millennials and Gen Z now make up 80% of new US Consumer Gold Card accounts. This indicates that the company’s updated benefits (and higher annual fee) are okay with the avocado toast crowd. Despite raising its full-year earnings outlook, investors are concerned about slowing spending and the sustainability of Amex’s cost-cutting measures. William Blair analysts Christopher Kennedy and Andrew Jeffrey noted, “Expectations were elevated, but we believe the growth opportunities remain large and the valuation remains attractive.”