American Express

American Express renewed its co-brand partnership with Delta Air Lines through 2029, which accounts for roughly 10% of AmEx's total revenue by some analyst estimates. Delta SkyMiles cards remain the most profitable airline co-brand portfolio in the industry, and both companies flagged in their respective earnings calls that card acquisitions through the partnership hit record levels last year.

The annual fee revenue model looks great until you stress test retention rates. If we hit a recession and consumers start trimming $695 Platinum cards, the revenue cliff is steep because unlike interchange-dependent models, AmEx has already booked that fee income and has to refund it pro-rata if members cancel. The operating leverage works brutally in reverse.

Does anyone have a good read on how the Business Platinum and Business Gold cards are performing relative to consumer cards right now? I know SMB spending has been a major growth driver but I'm trying to figure out if that segment is showing any stress given what we're hearing about small business confidence indices.

It's worth noting that AmEx's revenue model is fundamentally different from Visa and Mastercard in that they actually extend credit and carry receivables on their balance sheet, which means they're more sensitive to rate cycles and funding costs than the pure network plays. That's not inherently bearish or bullish, it's just a different risk profile that requires a different valuation framework.

Provisions for credit losses have been climbing steadily and delinquency rates in the 30-plus-day bucket are creeping back toward pre-pandemic norms, which sounds fine until you remember AmEx built a lot of its recent growth on younger Millennial and Gen Z cardholders who have never navigated a real credit cycle. The premium brand perception doesn't insulate you when the consumer balance sheet starts cracking.

AmEx just reported billed business growth of around 6% year-over-year and card member spending on travel and entertainment continues to outpace other categories. The Platinum and Gold card cohorts are spending more per head than any comparable demographic at Visa or Mastercard, and that closed-loop network means they keep the merchant data entirely in-house. This is a compounding moat that gets stronger every cycle.

Stephen Squeri has been quietly executing on a strategy to get AmEx cards into the hands of consumers in their 20s without diluting the premium brand, and the data suggests it's working with the Gold card becoming almost aspirational among young professionals the same way the Platinum was for their parents. If they retain even 60% of those cardholders as they age into higher earning years the lifetime value math is extraordinary.

The international card services segment is growing faster than domestic right now and most people are still valuing AmEx as a purely American story. Expansion in Asia Pacific and the continued push into premium travel corridors between Europe and the Middle East gives this company a longer growth runway than the domestic saturation narrative suggests.

AmEx announced expanded acceptance at Costco locations in several international markets following years of friction after the US partnership ended in 2016 when Visa took over exclusively. While this doesn't restore the massive co-brand agreement, broader merchant acceptance has been a long-standing knock on AmEx's network and any incremental progress matters for their global acceptance story.

How exposed is AmEx to any potential CFPB rulemaking on late fees or credit card interest rate caps that have been floated in Congress? I know the Capital One and Discover merger outcome and broader regulatory scrutiny of the card industry could create overhang, and I'm not sure how to size that risk for a position.