American Express Stock Slides Despite Profit Beat as 5% Job Cuts Loom

• American Express stock fell despite adjusted earnings of $4.68 a share beating estimates and a higher full-year profit forecast
• American Express plans to cut 5% of its global workforce, recording a $336 million restructuring charge
• Through October 21, AXP returned −12.98% this year versus Visa’s 16.62% gain, including dividends

American Express (AXP) stock fell Friday despite a quarterly profit beat and a higher earnings forecast. Cardholders kept spending, credit losses eased, and revenue rose, giving the company plenty to point to. Yet alongside those results came plans to cut roughly 5% of its global workforce. For investors, the question is what those competing signals say about the business, particularly when some of the quarter’s biggest gains came from items that will not repeat.

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American Express Stock Slips Despite Higher Profit Outlook

American Express reported adjusted earnings of $4.68 a share, beating the $4.48 analysts expected. Revenue increased 9% to $20.06 billion, narrowly missing the $20.12 billion consensus estimate. The company also raised the bottom of its annual adjusted earnings forecast to $17.60 from $17.30, keeping the upper end at $17.90.

The spending figures came with some respite. According to the company’s earnings release, billed business reached $454 billion, up 8%. Its net write-off rate eased to 1.8% from 1.9% a year earlier, while provisions for credit losses fell to $1 billion from $1.3 billion.

Reported earnings were stronger still, at $5.42 a share. This figure included a gain from selling the company’s stake in American Express Global Business Travel. The sale generated $982 million before tax, and adjusted results exclude the gain after accounting for the portion used to fund restructuring.

The American Express layoffs add another dimension to those results. Chief executive Stephen Squeri announced the planned 5% workforce reduction on the earnings call. The company recorded a $336 million restructuring charge, describing the changes as a way to improve efficiency and make room for investment. It did not provide a timetable for the cuts.

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How American Express Stock Compares With Visa

For shareholders, the American Express earnings beat follows a difficult year. Reports revealed that AXP stock was down 12.98% year to date, while Visa stock had gained 16.62%, including dividends. Those figures precede Friday’s earnings announcement.

A stock ROI calculator puts that gap into dollars. Applying those returns to equal $1,000 investments gives approximately $870.20 for American Express and $1,166.20 for Visa, a difference of $296.

It should be noted that American Express lends to cardholders and carries the associated credit risk. Visa operates a payments network and does not extend credit itself. This makes American Express’s improving write-off rate particularly relevant, and spending growth matters, but so does customers’ ability to repay.

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