American Express reported lower-than-expected sales in the second quarter of 2023, and the company’s shares fell 4.4% at the market’s opening on Friday. Credit card issuers have struggled to compare to last quarter, which showed strong increases in travel and entertainment spending, as consumers welcomed the lifting of coronavirus restrictions.
Amex Network Volume Below Estimates
American Express shares plunged Friday after the payment card issuer reported disappointing second-quarter 2023 results a day earlier. As of this writing, the stock is down 4.4% to $169.36 per share.
The drop came after investors jumped on Amex’s results, which showed spending growth on its cards hit the lowest level in more than two years, while its three-month sales growth fell short of expectations. Revenue for the quarter was $15.05 billion, compared with an estimated $15.48 billion. Additionally, American Express network volume grew 8%, its weakest growth since the first quarter of 2021, and below Wall Street expectations.
Overall, the total network volume increased to $426.6 billion. That was a record amount for the Buffalo, N.Y.-based financial technology giant, but it was still below consensus expectations of $441.6 billion. Meanwhile, travel and entertainment spending surged 14% over the same period, with most of the increase coming from the restaurants and food and beverage category.
“We saw more people getting delivery from restaurants during the pandemic. People have returned to in-person dining, but they haven’t necessarily abandoned it.”
– Amex Chief Financial Officer Jeff Campbell said:
Consumer Spending Habits and the Pandemic
Amex spending shows a notable shift in spending habits among Americans as the world recovers from the devastating coronavirus pandemic. Consumer spending fell 9.8% in the second quarter of 2020 compared to the same period last year, according to the Bureau of Labor Statistics (BLS).
And even in 2021, while the impact of Covid-19 was still evident on consumer spending in 2021, businesses and consumers began to adapt. d
Both the US economy and consumers are showing mixed signs this year. Notably, US consumers are still spending despite concerns about rising prices and job security. However, with inflation continuing, they are moving away from expensive brands to save money, but are also keen to splurge on specific goods and services.
This article originally appeared on The Tokenist