Recently, Jim Cramer has started to shift his opinion about payment and travel services provider American Express Company (NYSE:AXP). The shares are down by more than 18% year-to-date. For instance, in November 2025, Cramer praised CEO Steve Squeri and remarked that the executive had “turned that company into a millennial paradise.” If you’re wondering how the stocks he discussed back then have performed since then, check out the link. Yet, with the shares down year-to-date, the CNBC TV host has become increasingly cautious about American Express Company (NYSE:AXP):
“Travel’s good, going out is good. Those areas haven’t been hurt. This is a total theoretical sell, betting that Steve Squeri can’t deliver with a stock that sells at 17 to 16 times earnings. Do I want to buy it right here? Look I think it’s pretty low I have to, last quarter wasn’t bad, it’s just that people feel that this is what you sell in a tightening cycle. And you can’t defeat that logic, cause it’s happened so many times. It’s not what you buy. You can buy some real estate stocks, you can buy utilities and you can buy some select tech, Leopold tech.”
For American Express, the narrative is all about spending by the wealthy. Additionally, while growth for other businesses stalls, for American Express, its international billings are being driven by younger users. This falls in line with Cramer’s earlier remarks of a Millennial paradise. As part of its second quarter earnings release, the firm outlined that its International Billings grew by 50% over the past three years. More importantly, American Express outlined that Millennials and Gen Z accounted for 65% of the new accounts. With younger users always being preferred by subscription and usage driven firms, the growing popularity could create long term tailwinds for American Express.
Overall, revenue grew to $19.6% or 10% annually. Additionally, on the premium spending front, even though the firm had increased the annual fees of its Platinum card to $895, retention rates were flat. The fee hike also led net card fee revenue to jump by 15% annually to $2.9 billion.
However, while the top line might be growing, higher expenses could cap American Express’s valuation. Management failed to raise the full year earnings guide. The booming high end card business is coming at a cost. During the second quarter, the firm’s total consolidated expenses jumped by 12% while its Card Member Service Expense jumped by 50%. Perhaps the rising expenses are a reason why Cramer is uncertain about the current valuation justifying an entry into the stock.
What is this valuation? Well, American Express trades at a forward P/E ratio of 15.20 which is higher than Capital One’s 8.49 but lower than Visa’s 24.04. Short interest as a percentage of float is similar to Capital One and higher than Visa. 85 funds tracked by Insider Monkey had disclosed a stake in American Express in Q2, which was lower than Capital One’s 133 and higher than Visa’s 194.
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