American Express (AXP)

History of the Company

The American Express Company, or AmEx, was founded in 1850 as an express mail business. The company started as a joint stock corporation from a merger of the express companies owned by Henry Wells, William G. Fargo, and John Warren Butterfield. In 1882, the company branched out to include a money order business, and in 1891, they launched the American Express Traveler’s Cheque. American Express began issuing charge cards in 1958, adding the Gold Card in 1966 and the Platinum card in 1984. In 1987, the Optima card became the company’s first credit card, allowing a balance to be carried over to the next month.

In 2008, during the financial crisis, American Express received aid from the government through the TARP program. The funds were repaid in 2009, plus additional dividend payments.

The company headquarters is in Manhattan, and the company’s stock is one of the thirty stocks listed on the Dow Jones Industrial Average.

Trading American Express: What You Need to Know

  • American Express’ business model is based on consumer loyalty. Its range of cards offers benefits and rewards that ensure their customer base is happy. Investor Warren Buffett has said that the company is “synonymous with financial integrity and money substitutes around the world.” According to Buffett, any dip in prices is simply an opportunity to buy.
  • Retail sales and consumer confidence are critical indicators of AmEx’s future performance. The company makes money on fees charged to businesses that accept payment as well as card fees and interest from the card owner. Therefore, any growth in retail sales is good news for American Express.
  • When American Express offers new products and services to expand its loyal client base, the success of those products is another indicator of the company’s performance. A successful new credit card launch, for example, will likely drive prices higher.
  • Visa and MasterCard are American Express’ biggest competitors. Their performance reports and news are important to watch, as they will offer insights into the industry as a whole and anything that can affect AmEx stock.

American Express’ card rewards and benefits ensure that it has a loyal client base, but it must continue to expand to new markets in order to grow. Anyone interested in trading American Express should perform his or her own careful analysis of the company before deciding to trade.

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