American Express beats Q1 estimates as consumer spending rebounds

Yahoo Finance Video
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Yahoo Finance’s Brian Sozzi sat down with American Express CEO Stephen Squeri to break down the financial service company's first-quarter earnings report.

Video Transcript

JULIE HYMAN: Sozzi, as he mentioned earlier, teased earlier, had the chance to talk to the Amex CEO, following the earnings, talking about those premium cards and demand from corporate. What do you have to say, Brian?

BRIAN SOZZI: Right, Julie, so I caught up with Amex CEO Stephen Squeri earlier this morning, right after the company really beat handily on earnings, handily beat handily on revenue. I'll hit some of the finer points here. They noted that they added 2.4 million new cardholders in the most recent quarter. Squeri telling me a lot of these new cardholders are, in fact, millennials, I would suppose willing to pay fees to own the card, such as our very own Myles Udland. Also--

MYLES UDLAND: Gotta cancel that.

BRIAN SOZZI: [LAUGHS] Going further down the line, he's saying that travel entertainment is also starting to come back. What is not coming back and may not come back for a good bit is corporate card spending. In large part, that is because corporations have really watching every single expense on their balance sheet right now. Cardholders are not traveling to the extent that they were. I've been seeing that a lot when I talk to a lot of the lodging CEOs. No travel, perhaps less use of that Amex credit card.

What is also interesting to hear as well is the guidance. Squeri telling me that Amex could hit in 2022 earnings of about 9.15 a share to 9.25 a share. He sounded a bit more optimistic on them hitting the high end of that range. The Street right now for 2022 is about $9.19. So all in all, I would say a justified move here in Amex shares here in the early going. Stock's up about 4%.

MYLES UDLAND: You know, Sozz, this is very kind of nitty gritty numbers, digits, da-da-da-da, mustard stuff, as Matt McConaughey once said. But I know you guys also talked a little bit about the broader payment space, which is changing rapidly and, of course, how Amex is or isn't thinking about crypto right now.

BRIAN SOZZI: Yeah, to be fair, I'm still going through his comments. We did talk at length about, I would say, about a good seven to eight minutes on his views on Bitcoin. He is telling me he does view Bitcoin as a store of value, not necessarily a good one. And of course, Bitcoin was, what, 62,000. Now it's, what, 31,000, 32,000, so not exactly a great store of value in that regard. I wouldn't expect American Express to move super aggressive here into accepting Bitcoin and other cryptocurrencies. Making a good point that PayPal, a Square, those, in many respects, are wallets, and Amex is not a wallet. It's in our wallet.

MYLES UDLAND: Right. You follow that differentiation, Julie? I want to nod and be like, I got it, yes. I know the difference between--

JULIE HYMAN: No, I don't know.

MYLES UDLAND: --being a wallet and being in the wallet. There's something about fintech, if I can be honest, that kind of makes my eyes glaze over. But I know that, you know, American-- or excuse me, Visa and Mastercard are like the greatest stocks of all time. So joke's on me.

JULIE HYMAN: Well, but are they the greatest stocks of all time because they're fintech or because people like the regular old bread and butter? People use their stuff a lot.

MYLES UDLAND: Well, they're, like--

JULIE HYMAN: I don't know.

MYLES UDLAND: They're, like, the original fintech, like they're the original disintermediators, right? And they get a cut of that. They get a cut of all economic activity. And I think, if I'm not mistaken, that's the basic play, the basic pitch of every fintech, is, we will be the Visa of this for that reason.

BRIAN SOZZI: I am a little fascinated, though, to see how they are able to retain a lot of their new card members and to see the millennial push into owning a car that you have to pay a fee for amidst this world, where there's so many different options. I think it's very-- it is just very interesting. And I think that's one part of the reason, small part of the reason why you seeing the stock react the way it is.