American Express (NYSE:AXP) is generally less popular than some of the other, bigger brands in the credit card space. Thus, it has to do more to draw attention. Unfortunately, this doesn’t always work out so well, as its recent announcement to acquire Tock proved. Shareholders panned the move, sending American Express prices down fractionally in Friday afternoon’s trading.
American Express’ move to buy Tock would give it a new presence in the restaurant market, which explains why it plans to drop $400 million to pick the platform up. Tock handles restaurant bookings, and since restaurant spending is one of the biggest categories on American Express’ own books, having a way to offer customers a way to set up reservations and pay from the same platform was likely an appealing notion.
This actually builds on a plan American Express has had going for some time; back in 2019, it landed a platform called Resy, which also deals with restaurant reservations. With Tock, meanwhile, American Express would get access to 7,000 more restaurants, improving the odds its platforms will be used.
A Timely Play
You might think that this was a bad idea, with people more squeezed than ever and probably eating out less. Axios, meanwhile, begs to differ; it recently released a study showing that restaurants are having their “biggest year ever,” with annual projected sales for 2024 higher than even 2019. In fact, restaurant sales in both 2023 and 2022 were higher than they were in 2019, so it’s clear that restaurants are on the way back. Of course, some of this gain must be attributed to inflation; if you suddenly charge 30% more for a meal and lose 15% of your customer base, you’re still up on the previous year.
Is American Express Stock a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on AXP stock based on 10 Buys, nine Holds, and three Sells assigned in the past three months, as indicated by the graphic below. After a 37.95% rally in its share price over the past year, the average AXP price target of $235.83 per share implies 2.98% upside potential.
