: American Express is banking on younger customers as it targets annual revenue growth of more than 10%

American Express executives on Wednesday outlined three factors that they believe will offer a pathway to the long-term targets: the company’s strategic focus on priorities like relevance with younger generations, its momentum built during the pandemic, and structural shifts that could benefit the business.

During the fourth quarter, the company saw spending levels among millennial and Gen-Z cardholders land 50% above where they were in the same quarter of 2019. Amex is upbeat about its momentum with younger generations because historically it has benefited from being able to capture members who are about to enter their high-earning years and develop an interest in a broader range of financial products.

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Three quarters of new consumer Platinum and Gold Card acquisitions during 2021 came from millennials and Gen-Z customers, the company shared.

See also: American Express stock rockets toward best day in more than a year amid ‘record’ spending

Other strategic priorities include continued focus on the U.S. small-business client base, growth in merchant acceptance, and investments in technology and customer service.

“Our value propositions are resonating with customers, attracting younger-aged cohorts and SMEs [small-and medium-sized enterprises] to our premium offerings,” Chief Executive Stephen Squeri said during the presentation.

The company is also optimistic that its membership model will continue to have a flywheel-like effect on the business. “High-spending card members attract more merchants and partners to our ecosystem, who add value for our customers through exclusive offerings and experiences,” Squeri said.

As American Express looks toward further pandemic-recovery tailwinds, it views its growing merchant traction as a strength. “Cross-border travel will return, and when it does, our network will be more vibrant,” said Raymond Joabar, the company’s group president for global merchant and network services.

Additionally, the company sees broader societal trends working in its favor, such as growth in the consumer premium card arena, the increasing digitization of payments, and what Chief Financial Officer Jeff Campbell told MarketWatch is an “explosion” in small business creation.

Though other issuers have ramped up their premium businesses as well, Amex sees signs that its approach has paid off in an “intense competitive environment,” as it noted in its slide presentation.

The company increased the price of its Platinum and Gold cards in recent years to reflect the addition of benefits, but it continued to grow its membership base despite the price increases. This indicates to Amex that the premium landscape more generally is growing, creating further opportunity.

Amex recently rolled out new checking and debit products, and it views these as moves that can strengthen its relationships with existing cardholders.

“When you see us doing things like business checking accounts and consumer rewards, those in and of itself are not material financial drivers,” Campbell told MarketWatch. “We’re not going to lose money doing those checking accounts,” but Amex’s main financial drivers remain “payments and card-based borrowing needs,” he continued.

Shares of American Express are up about 1% in Wednesday afternoon trading. They’ve gained 12% since the company’s Jan. 25 earnings report, while the S&P 500
SPX,
+2.24%
has dropped 3.4% and the Dow Jones Industrial Average
DJIA,
+1.55%
has fallen 2.4% over the same span.