American Express Co. (NYSE: AXP), its franchise under attack by companies that include Visa Inc. (NYSE: V) and MasterCard Inc. (NYSE: MA), has posted a share price drop of 20.5% to $55.38, which makes it the worst-performing Dow Jones Industrial Average stock so far in 2016. The Dow is off 4.5% over the same period to 16,639.97.
To place the sharp decline in a longer term perspective: American Express shares are down 36% over the past year. CEO Kenneth Chenault has presided over the collapse. He has been chief executive since 2001. 24/7 Wall St. recently included Chenault on its list of CEOs Who Have to Go in 2016.
The editors commented:
Kenneth Chenault has been chairman and CEO of American Express since 2001. It is worth noting that he has made some good decisions for the company in the past. The company’s stock price, however, has been on the decline in recent months. The company has spun off several units over the years, and for the most part, this has hurt Amex. The stock closed 2015 at $69.55 — down 26% for the year, and analysts expect another decline in 2016. Among the events that have damaged Amex the most is the loss of its position as exclusive credit card for Costco. Amex also recently lost its branded card deal with Fidelity. Recently, Amex announced a management reorganization with an unknown number of job cuts, as well as a $1 billion target in cost cuts over the next two years. The company’s problems are exacerbated by the fact that many retailers do not use Amex. With the rise of Visa, MasterCard, PayPal, Apple Pay and a myriad of other forms of competition in card processing and card issuance, the time for a new transformational CEO for the digital age has arrived. With Chenault turning 65 this year, it is time to hand the baton over and let a new CEO move the company beyond its present problems.
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