Open a Stock trading account in 1 minute!
Welcome Bonus up to $10.000!
Headquartered in New York City, the American Express Company (commonly known as AMEX) is a global financial services company that provides charge and credit card services as well as various travel solutions.
The company serves both businesses and consumers through three distinct business segments: Global Consumer Services Group, Global Commercial Services, as well as Global Merchant and Network Services. The company was founded on March 18th, 1850, when three companies consolidated their businesses.
AMEX was initially involved in the express transportation of goods between New York and surrounding towns, but it quickly expanded its footprint, and by 1900, it had begun expanding internationally. By that time, AMEX had pioneered innovations, such as the Money Order and Travelers Checks.
However, the US government nationalised the express business in 1918, forcing the company to concentrate on its banking and travel services. Throughout the century, AMEX expanded into insurance, publishing and investment banking through mergers and acquisitions.
By the turn of the millennium, AMEX had become a major provider of consumer, business and corporate cards. The company offers travel solutions such as traveller’s checks, tour planning as well as hotel and car reservations.
AMEX is listed on the NYSE, where it trades under the ticker symbol AXP. The stock falls in the Financial Services sector, under the Credit Services industry. The company debuted on the NYSE on May 18th, 1977.
AMEX Stock History
Since going public, AMEX has performed 6 splits, with the last one being a 3-for-1 in May 2000. Stock splits usually make a stock more affordable for new investors, effectively improving demand, liquidity and volume.
The AMEX stock kick-started a multiyear rally from the mid-1990s that saw a rise from circa $10 to highs of circa $55 by September 2000.
Nonetheless, the stock recovered as economic conditions recovered, and it managed to hit a high of circa $65 by May 2007.
As a banking stock, AMEX was hit hard by the 2008 global financial crisis, as it plunged to lows of circa $10 by March 2009.
Since then, the stock has sustained a strong rally, first hitting a high of circa $95 in June 2014, before retracing to lows of circa $50 by February 2016. It then resumed its uptrend that sent the stock to a high of just above $136 in February 2020.
AMEX has always been a generous dividend payer, just like many other banking stocks. On top of the regular income, AMEX investors have also been treated to higher stock price gains.
How to Trade the AMEX Stock
Here are the factors to consider when trading the AMEX stock:
- Legislative and Taxation Issues
AMEX thrives when consumer spending is growing. This can be influenced by legislative issues such as minimum wage rates and taxation issues such as tax cuts. An increase in wages inspires higher spending by consumers. Tax cuts, such as the 2017/2018 corporate tax reduction to 21% from 35%, boosted the spending of businesses. Higher spending triggers higher prices for the AMEX stock, whereas lower spending triggers lower prices.
- Economic Conditions and Monetary Policy
Banking stocks rely heavily on the prevailing economic conditions and monetary policy. Favourable economic conditions are characterised by higher consumer and business spending, which are positive fundamentals for the AMEX business. Weak economic conditions limit the usage of AMEX services and may inspire lower prices for the stock. The monetary policy situation, especially interest rates, also greatly influence how AMEX performs. Higher interest rates limit the spending of AMEX customers, and it can also increase the risk of defaults even though the company caters for higher-income clients. In contrast, a low-interest regime encourages higher spending in both businesses and consumers.
- Competition and New Product Rollout
AMEX faces tough competition from well-oiled and high-wheeled rivals such as Discover, Visa and MasterCard. While AMEX is known to cater to the up-market clientele, its competition offers cheaper solutions with increased add-ons that may appeal to the company’s core market. Still, AMEX has, in recent years, rolled out products that target the mid and lower-end consumer market. The financial space is constantly evolving, and it is always important to watch out for digital payment players, such as eWallets and cryptocurrencies, that may also pose a threat to AMEX.
- Periodic Earnings Reports
AMEX’s fiscal year runs from January to December. It is always important to track the release of quarterly and annual reports that offer insight into important business metrics such as revenue, profits, dividend payouts, and future guidance. Positive reports usually inspire higher prices, where negative reports can pressure the stock lower.
Why Trade AMEX on the AvaTrade MT5 Platform
Here are the advantages of trading the AMEX stock with AvaTrade:
- A reputable broker with international regulation in various jurisdictions
- Offers leveraged trading and competitive spreads
- Ability to short sell AMEX stock
- Automated trading solutions
- Access to the AvaProtect™ risk management solution
- Engage in social trading via AvaSocial
- Access advanced analysis from Trading Central
Diversify your trading portfolio and trade AMEX with AvaTrade. Start trading today!