Young Spenders Boost American Express to New Heights
American Express is experiencing remarkable growth, driven by the spending habits of millennials and Gen Z. The company recently reported a significant increase in profits and revenue, with:
- $2.9 billion in net income, up 16% from last year.
- Earnings per share rising by 19%, surpassing expert expectations.
- Total revenue reaching a record $18.43 billion, an 11% increase from the previous year.
The Power of Young Spenders
Millennials and Gen Z now account for 36% of all card spending, matching Gen X. These younger generations are making 25% more transactions than older customers and have a strong preference for premium products, which is highly beneficial for American Express.
A Broader Trend
This trend isn't unique to American Express. Wealthy households are increasingly spending on premium products. The top 10% of households contribute to nearly half of all consumer spending, a critical factor since consumer spending makes up two-thirds of the U.S. economy.
Innovation and Engagement
American Express is actively refreshing its products to keep customers engaged. The latest refresh of the Platinum Card has been a massive success, with new accounts doubling compared to previous versions. The new card offers lifestyle and digital perks that appeal to young, high-income consumers.
A Bright Future
Due to this strong performance, American Express has raised its full-year outlook, expecting:
- Revenue growth of 9% to 10%.
- Earnings per share between $15.20 and $15.50.
Over the past three years, the company has returned about 70% of its earnings to investors.
The Future is Young
Millennials and Gen Z are crucial to American Express's future. The company has been actively working to attract these younger generations and grow with them. The Platinum Card has evolved from a travel card to a premium lifestyle card, offering benefits like digital entertainment, wellness, and delivery services, in addition to travel perks.
