American Express stock took a hit after its third-quarter earnings report, but Jim Cramer believes the dip presents a buying opportunity for investors. The company reported a slight revenue miss and trimmed its full-year forecast, causing shares to drop over 2% by Monday’s close. However, Cramer argues that Wall Street is overlooking American Express’s earnings strength and its ability to attract younger customers.
The company posted a significant earnings beat and lifted its earnings outlook, despite the top-line miss. Cramer praised American Express’s credit quality numbers, which he expects to improve as the Federal Reserve continues to cut interest rates.
American Express draws younger generations
He also highlighted the company’s success in winning over Millennial and Gen Z members, who he believes will stick with American Express for decades to come. CFO Christophe Le Caillec noted on the earnings call that the company is seeing strong loyalty from younger cohorts, with new customer retention higher than that of older generations. A spokesperson from American Express told reporters that Millennial and Gen Z consumers are a key growth engine for the company, accounting for 60% of new consumer account acquisitions globally.
Cramer believes that if investors focus on the big story of American Express’s long-term growth potential and ability to attract younger customers, they will recognize the current pullback as a chance to buy the stock hand over fist. Despite the revenue miss, American Express’s Card Member spending grew by 6% year-over-year to $387.3 billion, leading analysts to maintain an optimistic outlook on the company’s future performance.
