NEW YORK - American Express (NYSE: NYSE:AXP) has entered into agreements to acquire Tock and Rooam, two technology companies specializing in restaurant and event management, and mobile payment solutions, respectively. The financial giant aims to bolster its suite of digital offerings for restaurants and merchants, as well as enhance the dining experience for its Card Members.
The acquisition of Tock from Squarespace (NYSE: SQSP) is set to enhance American Express's existing dining platform by adding approximately 7,000 restaurants, wineries, and other venues to its network. Tock, known for its reservation, table management, and event ticketing tools, was launched in 2014 and acquired by Squarespace in 2021. The agreement includes a partnership between Squarespace and American Express to offer additional benefits to small businesses through the Amex Offers program.
Rooam, established in 2015, is recognized for its integrations with major point of sale providers, which will add new capabilities to the Resy dashboard, an American Express-owned dining platform. Rooam's technology is designed to streamline marketing, loyalty programs, and payment processes for hospitality providers.
The transactions are subject to customary closing conditions, including regulatory approvals, particularly for the Tock acquisition. American Express will purchase Tock for $400 million in cash, subject to customary adjustments, while the financial terms of the Rooam acquisition have not been disclosed.
Howard Grosfield, President of U.S. Consumer Services at American Express, commented on the acquisitions, emphasizing the company's commitment to providing unique dining benefits and experiences to Card Members. Pablo Rivero, Vice President of American Express Global Dining and CEO of Resy, noted that the acquisitions would enhance the company's dining platform and support industry growth.
Matthew Tucker, Head of Tock, expressed his enthusiasm for the opportunity to innovate within American Express's world-class dining program. Junaid Shams, co-founder and CEO of Rooam, highlighted the potential for their technology to power payments and loyalty programs for hospitality providers.
These strategic acquisitions follow American Express's reported increase in engaged diners and restaurant partners since acquiring Resy in July 2019. The company aims to continue supporting the hospitality industry's growth through these new partnerships.
In other recent news, American Express has reported an uptick in delinquency rates for its U.S. Consumer and Small Business Card Member loans in May. The total loans for the consumer segment stood at $84.0 billion, while small businesses reached $28.2 billion. The company also reported changes in net write-off rates for both segments.
Financial firms have been closely monitoring these developments. Barclays maintained an Equalweight rating on American Express, predicting potential 10% revenue growth by 2024, driven by Net Interest Income contributions. Wells Fargo also maintained an Overweight rating, viewing the current stock valuation as an investment opportunity. Meanwhile, Citi initiated coverage with a Neutral rating, setting a price target of $250.00 per share, based on lower revenue projections offset by reduced expenses.
BTIG also initiated coverage on American Express with a Neutral rating, citing potential challenges for consumer spending levels. Despite these concerns, American Express was recognized for its successful growth of new accounts in both Consumer and Commercial sectors. In a significant geopolitical development, Russian President Vladimir Putin authorized American Express to voluntarily shut down its operations in Russia. Lastly, Keefe, Bruyette & Woods maintained their Outperform rating on American Express, indicating potential upside for the company's stock. These are the recent developments that investors may want to keep an eye on.
InvestingPro Insights
As American Express (NYSE: AXP) continues to expand its digital offerings with strategic acquisitions, the company's financial metrics provide a glimpse into its market position and future prospects. With a robust market capitalization of $165.59 billion and a price-to-earnings (P/E) ratio of 18.96, American Express is trading at a low P/E ratio relative to its near-term earnings growth. This is underscored by an adjusted P/E ratio for the last twelve months as of Q1 2024 at 18.3, which aligns with the company's growth trajectory.
The company's commitment to shareholder returns is evidenced by its impressive track record of maintaining dividend payments for 54 consecutive years. This dedication to consistent dividends, coupled with a dividend yield of 1.22%, showcases American Express's stability and reliability as an investment. Additionally, the company's revenue growth of 9.33% over the last twelve months as of Q1 2024, further supports its strong financial performance.
InvestingPro Tips also highlight American Express as a prominent player in the Consumer Finance industry, with analysts predicting profitability for the company this year. These insights, along with the company's large price uptick of 25.37% over the last six months, reflect investor confidence and a positive market response to its strategic initiatives.
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