American Express Stock Dips. Time to Buy?
Credit card stocks and shares of banks that lend to credit card users took a hit on Monday after President Donald Trump discussed plans to cap credit card interest rates. Shares of American Express (NYSE: AXP) declined approximately 4% on Monday, and the stock continued to fall (albeit only slightly) on Tuesday.
It's easy to see why the market reacted negatively to the news. Credit card interest rates are a major part of the economics for many card issuers. Put a hard ceiling on those rates, and investors immediately start asking what that would do to profits.
However, a lot is still unknown about what a rate cap would look like in practice -- and whether it would actually be implemented. Meanwhile, American Express's underlying business has been performing well. So, this begs the question: Is this an opportunity to be "greedy when others are fearful," as famed investor Warren Buffett has advised at times? Or is this a real risk that alters the risk profile of the stock until investors have more information?
Source Fool.com
