American Express Shares Plunge 4.5% on Trump’s Proposed 10% Credit-Rate Cap
Trump’s call for a one-year 10% cap on credit card interest triggered a 4.5% intraday drop in American Express shares. Industry groups warn the cap could force issuers to cut credit lines and dismantle rewards programs, potentially reducing transaction volumes funded by high-interest income.
1. Analysts Adjust Ratings and Price Targets
American Express has seen a flurry of analyst activity in recent weeks, with Barclays raising its price objective from $355 to $367 and assigning an “equal weight” rating on January 6, Keefe Bruyette & Woods lifting its target from $371 to $394 with an “outperform” recommendation on October 1, and Truist Financial increasing its forecast from $395 to $420 alongside a “buy” rating on December 22. Weiss Ratings upgraded the shares from “hold (c+)” to “buy (b-)” on December 29, while Goldman Sachs reaffirmed its “buy” stance with a $420 price objective on January 6. Collectively, the 27 analysts covering American Express now yield an average 12-month target just under $344, reflecting a consensus “Hold” view but with notable upside potential in light of recent upward revisions.
2. Insider Transactions Signal Confidence Shift
During the fourth quarter, American Express insiders markedly reduced their positions. Chief Marketing Officer Elizabeth Rutledge sold 50,000 shares on October 31 for proceeds totaling over $18 million, trimming her stake by 36.9% to roughly 85,600 shares. Earlier, Denise Pickett disposed of 5,000 shares on October 22, generating $1.75 million and cutting her holding by 39.3% to 7,726 shares. Over the past three months, insiders have unloaded 57,515 shares valued at approximately $20.7 million, a trend that contrasts with broader market optimism and may reflect changing personal outlooks on near-term growth.
3. Institutional Investors Boost Stakes Amid EPS Miss
Major institutional players continue to back American Express despite a surprise EPS shortfall in the latest quarter. Vanguard Group increased its position by 1.3% to 46.4 million shares, now worth about $14.8 billion, while Geode Capital Management lifted its stake 11.1% to 13.5 million shares ($4.3 billion). Fisher Asset Management added 1.7% more stock, bringing holdings to 8.9 million shares ($3.0 billion), and Norges Bank initiated a new $1.9 billion stake. Together, these funds represent over 84% of float ownership. This backing follows the Q4 report released January 30, which missed consensus EPS by $15.41 due to temporary revenue recognition shifts, even as net margin held near 15% and return on equity stayed above 30%.