American Express Company is a company based in the United States. The company designs, manufactures, and sells credit card products around the world. The company operates payment and financial services, network products, and many others. The company was founded in 1850.
Why You Should?
- American Express is a great reopening play in an investor’s portfolio. During the pandemic, the company saw a drop in payment volumes and transactions as people bought fewer things and stayed at home. However, once this pandemic is over, the company will continue to grow.
- American Express tends to have wealthier users than other credit card companies like Visa and MasterCard. This will help the company maintain payment and transaction volumes during tough economic times as wealthy individuals will maintain spending. This will help the company and its investors.
- American Express will benefit from a cashless future. Many countries and consumers around the world want to shift from cash to plastic (credit cards) because it is more convenient and easier to use. This rise in demand for credit cards will benefit the company and its investors.
- The company is slowly innovating in credit card and financial technology products. Recently, the company is going into cryptocurrencies by allowing some cards to transact in cryptocurrencies. I personally don’t invest in cryptocurrency but many experts think that this is the future. This might benefit the company and its investors in the future.
Why You Should Not?
- The company faces tough competition in the credit card and financial technology industry. Some of these competitors include Visa, Mastercard, Discovery, and other companies. This might hurt the company and its investors in the future.
- American Express is also starting to face competition from financial technology firms like Apple, Google, PayPal, Square, and many others. This competition might hurt the company in the future as they are more popular with younger consumers. This competition also has a different set of regulations to play by, something that will hurt the company and its investors.
- American Express also has to deal with a weak regulatory front across many countries as governments want to further protect the consumer and small businesses. If regulation is passed on this front, then it will most likely hurt the operating results of American Express and will also hurt the company’s investors.
I think that American Express is a great long-term investment due to its position as a good reopening play, a wealthy user base, continued innovation, as well as a cashless future. However, tough competition, especially from financial technology companies, as well as a weak regulatory front might hurt the company and its investors.