American Express (AXP) shares hit an intra-day record on Friday after a much better than expected third quarter in large part, fueled by millennials and Gen Z cardholders.
The card issuer said spending by millennial and Gen cardholders gained 38%, compared to the third quarter of 2019 excluding the impact of currency fluctuations. Amex said it acquired 2.6 million new card members in the quarter.
Amex CEO Stephen Squeri told Yahoo Finance the younger set has embraced the company's increased perks under the Platinum Card (aka a "refresh" to the card that debuted earlier in the year), despite the annual fee going to $695 from $550.
"So, this is a card that before the refresh was doing really well. It's doing phenomenal now, and 70% of those new consumers are millennials and Gen Z. And, we're retaining card members," explained Squeri.
Here is how American Express performed compared to Wall Street estimates:
Net Sales: $10.93 billion vs. $10.54 billion
Diluted EPS: $2.27 vs. 1.77
American Express shares rose 5% in afternoon trading on Friday. Shares of Amex have surged 55% so far on the year, outperforming the Dow Jones Industrial Average's 17% advance. Mastercard's stock has risen slightly year-to-date, while Visa has tacked on 5%.
By line of business, Amex performed well.
American Express saw top- and bottom-line growth within all its business segments as the global economy continued to claw back from the COVID-19 pandemic. The results were paced by the company's largest segment, Global Consumer Services. Sales rose 21% from a year ago to $6.4 billion. Pre-tax profits increased to $1.5 billion from $1.1 billion a year ago.
Meanwhile, profits at Amex's Global Commercial Services segment notched a profit of $718 million from $272 million last year. Profits in the Global Merchant and Network Services segment clocked in at $529 million, compared with $326 million a year earlier.
Programming note: American Express CEO Stephen Squeri will be a featured speaker at the Yahoo Finance 'All Markets Summit' on Oct. 25.