American Express (AXP) shares fell 3.73% to $313.03 on Friday, October 23, after the card issuer paired a higher profit outlook with plans to cut about 5% of its workforce.
Amex raised its 2026 adjusted EPS guidance to $17.60 to $17.90, up from $17.30 to $17.90, after third-quarter adjusted EPS rose 13% to $4.68. Analysts expected about $4.48, according to Reuters. In the same report, Amex booked a $336 million pretax restructuring charge that will eliminate about 5% of its positions globally, or roughly 3,500 jobs.
Demand isn’t the problem. Revenue rose 9% to a record $20.1 billion, and billed business climbed 8% to $454 billion. What’s climbing is the cost of keeping premium members happy.
Why Amex Is Cutting Now
CEO Stephen Squeri told analysts on the Q3 2026 earnings call that Amex needed to become “a more agile and efficient organization,” with fewer layers and faster decisions. Amex is paying for the restructuring with part of the $982 million gain from selling its stake in Global Business Travel Group, so the charge didn’t touch adjusted EPS.
The cost line investors are watching is what Amex calls variable customer engagement costs: rewards, card member services and partner payments. They rose about 15.5% to $8.9 billion in Q3, or 44.3% of revenue. Card member services alone jumped 36% to $2 billion on the benefits added in the refreshed Platinum Card. Marketing rose 11% to $1.77 billion.
Amex’s Costs Have Kept Pace With Its Revenue
TIKR shows Amex’s revenue after credit-loss provisions, which makes it a clean test of how much growth reaches profit.
In the first half of 2026, revenue after provisions rose 12.2% from a year earlier, while Amex’s reported total expenses rose 11.7%. In Q2 alone, reported expenses grew 12.3%, against 12.8% growth in revenue after provisions. Q3’s totals are muddied by the GBTG gain and the restructuring charge, but inside them, engagement costs grew about 1.7 times as fast as revenue.
Higher engagement costs make efficiency savings more valuable, but management framed the cuts as a broader reset aimed at streamlining teams and freeing up money to invest. Amex’s narrower operating-expense line, which covers salaries and overhead rather than perks or marketing, grew just 3% once the gain, the charge and legal items are stripped out.
TIKR Tracks 31 Analysts on American Express. How Many Say “Buy”?
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The Perk Bill Should Ease in Q4
The best answer to the cost worry came from CFO Christophe Le Caillec. Q3 is the quarter Amex laps the Platinum refresh, and he expects growth in engagement costs to moderate significantly in Q4, back toward pre-refresh rates. Fees are already paying for the upgrade: card fee revenue reached about $3 billion in the quarter, up 17% on an FX-adjusted basis.
The competition isn’t going away, though. Squeri named Capital One (COF), JPMorgan Chase (JPM) and Citigroup (C) among the issuers pushing into premium cards, and said he expects the segment to stay highly competitive because it’s so profitable. Perk spending can slow, but it won’t stop.
Conclusion
The sell-off has left Amex cheaper than usual.
At 16.17x forward earnings, the stock trades about 7% below its five-year average of 17.45x and 30% below its 23.11x peak. That’s a discount for a company that just raised its EPS floor and returned $2.2 billion to shareholders in Q3, including $1.6 billion of buybacks.
The cost worry is real, but it has a date on it. If Q4 engagement costs grow closer to revenue than the 15.5% they posted in Q3, the savings from the job cuts can reach the bottom line instead of being absorbed by perks, and 16x looks too low for a business targeting mid-teens EPS growth. Friday’s drop looks like a better entry point to me, with the January report and 2027 guidance as the proof.
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