The stock of American Express faced a downturn following its third-quarter earnings announcement, yet Jim Cramer sees this decline as a prime opportunity for investors to buy in. The firm reported a slight shortfall in revenue and revised its full-year projections downward, resulting in a share price drop of over 2% by the end of Monday. Nevertheless, Cramer contends that Wall Street is missing the mark on American Express’s robust earnings and its capability to attract a younger clientele.
Despite missing on the top line, the company delivered impressive earnings that surpassed expectations and raised its profit outlook. Cramer commended the credit quality metrics of American Express, which he anticipates will show further improvement as the Federal Reserve continues its interest rate reductions.
American Express appeals to younger audiences
He further emphasized the firm’s achievement in appealing to Millennials and Gen Z, who he believes are likely to remain loyal to American Express for many years. CFO Christophe Le Caillec mentioned during the earnings conference that the company is enjoying strong allegiance from younger demographics, evidenced by new customer retention rates that surpass those of older age groups. An American Express representative informed the media that Millennial and Gen Z consumers play a crucial role in the company’s growth strategy, representing 60% of the new consumer account sign-ups globally.
Cramer asserts that if investors concentrate on the overarching narrative of American Express’s long-term growth prospects and its capacity to engage younger customers, they will see the current market pullback as an excellent chance to purchase the stock extensively. In spite of the revenue shortfall, American Express’s Card Member spending surged by 6% from the previous year, reaching $387.3 billion, which encourages analysts to uphold a positive outlook on the company’s future performance.
