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SUMMARY
The stock market witnessed a major sell-off on 9th March and has continued its downward spiral since then.There were two distinct trends driving the sell-off. Firstly, the increasing number of Coronavirus cases in the U.S and other countries outside China is causing mounting concerns of a global economic slowdown. Secondly, a sharp decline in crude oil prices after Saudi Arabia increased production in a price war with Russia.American Express (NYSE: AXP) stock fell nearly 23% over the last four days and is down by a total of 36% since early February, considering the impact that the outbreak and a broader economic slowdown could have on consumer spending and the global credit card industry.Additionally, the company has several co-branding card arrangements with other corporations e.g., Delta Air Lines, Marriott International, British Airways, Hilton Worldwide Holdings, etc. along with offering travel services with American Express leisure and business travel.Further, the Delta cobrand portfolio represented approximately 8 percent of its worldwide billed business and approximately 22 percent of worldwide Card Member loans as of December 31, 2019.With hotel occupancy rates and the global travel industry being worst hit by the Coronavirus outbreak, it could severely impact the credit card giant’s revenue prospects for the year.However, going by the trends seen during the 2008 economic slowdown, American Express will likely bounce back strongly and potentially outperform the market as the crisis winds down.In this analysis, we take a look at how the company’s stock reacted to the economic crisis of 2008 and compare its performance with the S&P 500.
2020 Coronavirus/ Oil Price War Crisis
Timeline of 2020 Crisis So Far
12/12/2019: Coronavirus cases first reported in China1/31/2020: WHO declares global health emergency.3/9/2020 to 3/12/2020: S&P 500 sees 17% drop over 4 days, as U.S. cases accelerate and oil prices crash, amid Saudi led price war.
American Express Company Performance During 2020 Coronavirus/Oil Price War Crisis
American Express stock declined by about 23% since Monday, March 9th and the stock is down by about 36% since February 1, after the WHO declared a global health emergency.In comparison, Mastercard, which is a payment services giant, saw its stock fall by about 24% since early February and by about 16% over the last 4 days. View our analysis for Mastercard here:
2007-08 vs. 2020 Crisis Comparison: How Did MasterCard Stock Fare Compared with S&P 500?
AXP Stock: Key Values During 2020 Crisis
% Change for Key Dates: 2020 Crisis
S&P 500 Index Performance During 2020 Coronavirus/Oil Price War Crisis
On the other hand, the S&P 500 declined by 17% over the last 4 days and has fallen by 26% since February 1, after the global health emergency was declared by the WHO.
S&P 500 Index: Key Values During 2020 Crisis
% Change for Key Dates: 2020 Crisis
2007-08 Financial Crisis
Timeline of 2007-08 Crisis
10/1/2007: Approximate pre-crisis peak in S&P 500 index9/1/2008 - 10/1/2008: Accelerated market decline corresponding to Lehman bankruptcy filing (9/15/08)3/1/2009 - Approximate bottoming out of S&P 500 index1/1/2010 - Initial recovery to levels before accelerated decline (around 9/1/2008)
American Express Company Stock Performance Over 2007-08 Financial Crisis
AXP stock declined from levels of around $49 in October 2007 (the pre-crisis peak) to levels of around $10 in March 2009 (as the markets bottomed out) and recovered to levels of about $35 in early 2010.Through the crisis, AXP stock declined by as much as 80% from its approximate pre-crisis peak. This marked a sharper decline than the S&P which fell by as much as 51%.However, the stock recovered strongly, rising by 245% between March 2009 and January 2010. In comparison, the S&P rose by about 48% over the same period.
AXP Stock: Key Values During 2007-08 Crisis
% Change for Key Dates: 2007-08 Crisis
AXP Stock: Cumulative % Change from 10/1/2007
S&P 500 Performance Over The 2007-08 Financial Crisis
The S&P declined from levels of around 1540 in October 2007 to levels of around 760 in March 2009 and recovered to levels of 1120 by January 2010. Through the crisis, the S&P declined by as much as 51% from its approximate pre-crisis peak.
S&P 500 Index: Key Values During 2007-08 Crisis
% Change for Key Dates: 2007-08 Crisis
S&P 500 Index: Cumulative % Change from 10/1/2007
Related Analyses
2007-08 vs. 2020 Crisis Comparison: How Did American Express Company Stock Fare Compared with S&P 500?
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American Express Stock (NYSE: AXP)
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American Express Pre-Earnings: Will AXP's FY 2019 revenues miss consensus, resulting in the stock price falling post earnings release?
American Express Company - AXP
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