American Express Stock To Fall 50% On Economic Headwinds?
Question: How would you react if you held American Express stock (NYSE: AXP) and its value fell by 50% or more in the coming months? Although this might seem a bit extreme, such an occurrence has happened before and could repeat itself. American Express stock has been a relatively weak performer this year, with its stock declining by 7% since early January, compared to the S&P 500, which has declined by 3% over the same timeframe. While the company posted a better-than-expected set of Q4 2024 results, led by rising payment volume and higher fee related revenues, there could be multiple headwinds in the near term. The overall market sentiment has been negative amid increasing concerns about a U.S. recession following tariffs imposed by President Donald Trump on major trading partners. This could have a significant impact on American Express, given that its business is largely tied to consumer spending and international travel volumes.
Here’s the point: The key takeaway is that during a downturn, American Express stock might incur meaningful losses. Data from 2020 indicates that AXP stock lost about 50% of its value in only a few quarters while also seeing a peak-to-trough decline of about 32% during the 2022 inflation shock, faring a tad worse than the S&P 500. This raises the question: Could the stock see a sell-off and reach as low as $135 (from the current $270) if a similar situation were to unfold? Naturally, individual stocks are generally more volatile than diversified portfolios. Therefore, if you are looking for growth with reduced volatility, you might consider the High-Quality portfolio, which has outperformed the S&P 500 and generated returns of over 91% since its inception.
President Donald Trump’s aggressive tariff measures – including a 20% tariff on Chinese imports and 25% on imports from Canada and Mexico, along with tighter immigration restrictions – have raised concerns that inflation might return. All of this suggests that the U.S. economy could encounter significant difficulties and even a recession – our analysis here on the macro picture. In fact, during an interview earlier this month, the President did not rule out the possibility that new tariffs might trigger a recession. When taking into account the heightened uncertainty from the Trump administration’s policies, these risks become especially critical. The ongoing Ukraine–Russia war and global trade tensions further obscure the economic outlook. Tariffs increase import costs, leading to higher prices, reduced disposable income, and weaker consumer spending.
This could impact American Express in multiple ways. Higher prices may lead consumers to cut back on discretionary spending, potentially lowering transaction volumes on the company’s network. If a recession follows, job losses and lower incomes could further weaken spending and payment volumes. Businesses facing higher costs might also tighten their budgets, leading to lower corporate spending and fewer business-related transactions. American Express is more exposed to the travel and entertainment sector than its peers, a category that typically sees a sharper pullback during downturns. Much of the company’s recent growth has come from increased spending by millennials and Gen Z in these areas. In the holiday quarter, travel and entertainment billings rose 11%, outpacing the 8% growth in goods and services.
- Why American Express Stock Has Surged 55% This Year
- American Express Stock Is Up 33% YTD, What To Expect From Q2 Earnings?
- American Express Stock Is Up 23% YTD, What To Expect?
- American Express Stock Is Up 17% YTD, What To Expect From Q1?
- Up 21% YTD, Where Is American Express Stock Headed?
- Up 25% YTD, What To Expect From American Express Stock?
How resilient is AXP stock during a downturn?
AXP stock has fared worse than the benchmark S&P 500 index during some of the recent downturns. Worried about the impact of a market crash on AXP stock? Our dashboard How Low Can American Express Stock Go In A Market Crash? has a detailed analysis of how the stock performed during and after previous market crashes.
Inflation Shock (2022)
• AXP stock fell 32.0% from a high of $198.38 on 16 February 2022 to $134.91 on 2 October 2022, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 26 January 2024
• Since then, the stock has increased to a high of $325.87 on 23 January 2025 and currently trades at around $270
Covid Pandemic (2020)
• AXP stock fell 49.6% from a high of $136.93 on 19 February 2020 to $68.96 on 23 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 23 February 2021
Global Financial Crisis (2008)
• AXP stock fell 83.8% from a high of $63.23 on 14 October 2007 to $10.26 on 8 March 2009, vs. a peak-to-trough decline of 56.8% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 5 March 2013
Valuation
At its current price of about $270 per share, AXP is trading at approximately 18x consensus 2025 earnings, which seems like a relatively fair valuation. The company’s revenue growth, while good, is not exactly stellar. Consensus projects revenue growth rates of about 8% each year over FY’25 and FY’26. The company’s more affluent customer base should weather any economic downturns better than other card players, but a downturn still remains a big risk for the company given its heavy reliance on discretionary spending categories like travel and entertainment, which are more vulnerable to economic slowdowns.. The company has also been spending more on marketing in recent years. In 2024, marketing spending jumped 16% to about $6 billion, and if the trend continues in an economic downturn, it could put pressure on margins.
Given this potential slowdown in growth and the broader economic uncertainties, ask yourself this question: Do you intend to hold on to your AXP stock now, or will you panic and sell if it begins dropping to $135 or even lower? Holding onto a declining stock is never easy. Trefis collaborates with Empirical Asset Management—a Boston area wealth manager—whose asset allocation strategies yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Empirical has incorporated the Trefis HQ Portfolio into its asset allocation framework to provide clients with better returns and less risk compared to the benchmark index—a less turbulent ride, as shown in HQ Portfolio performance metrics.
| Returns | Mar 2025 MTD [1] |
2025 YTD [1] |
2017-25 Total [2] |
| AXP Return | -8% | -7% | 318% |
| S&P 500 Return | -4% | -3% | 154% |
| Trefis Reinforced Value Portfolio | -5% | -6% | 575% |
[1] Returns as of 3/27/2025
[2] Cumulative total returns since the end of 2016
Invest with Trefis Market-Beating Portfolios
See all Trefis Price Estimates