Shares of American Express plummeted more than 6% in morning trading last Friday after the company reported second-quarter results that showed strong revenue and earnings growth but also a sharp rise in expenses that worried investors. Revenue net of interest expense reached $19.6 billion, up 10% from a year ago, while earnings per share rose 11% to $4.53, beating analyst estimates by about $0.12. However, expenses grew 12% year over year to $14.5 billion, and CFO Christophe Le Caillec said on an analyst call that the higher level of spending will continue through the end of 2026, with marketing expenses expected to be 10% higher in the second half of the year. The increased marketing spending, which was up about 9% in the quarter, is aimed at attracting and retaining members, particularly among younger consumers such as millennials and Gen Z, who are the company's fastest-growing group, but it also suggests that acquiring those new memberships is becoming more expensive.
American Express CompanyRising expense outlook and continued high spending through 2026, with marketing costs increasing, worry investors despite strong revenue and earnings.
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