American Express faces potential 50% stock decline amid economic fears

In the United States, the economic landscape was impacted by various factors leading to increased market volatility. After experiencing a robust performance in Q4 2024, American Express reported a rise in payment volumes and fees. However, fears of an impending recession raised concerns for the company's future, particularly due to its dependence on consumer spending and international travel. Tariffs imposed by President Donald Trump on key trade partners further contributed to the economic uncertainty, creating a risk for American Express which operates significantly in discretionary sectors. Historical data indicates that during past economic downturns, American Express stock has underperformed compared to the S&P 500. For example, during the 2020 pandemic, the stock lost almost 50% of its value, and in the inflation crisis of 2022, it declined by about 32%, suggesting vulnerability to economic conditions. As the Ukraine-Russia conflict and trade disputes loom, consumer spending might decline due to reduced disposable income from higher import costs, raising concerns about American Express's reliance on those sectors. The company has recently increased its marketing expenditure significantly, which may further pressure its financial margins if the economy weakens, highlighting the potential future challenges American Express could face as market conditions fluctuate.