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AmEx (AXP) Buys Tock for $400M to Lock in High-End Businesses

American Express Company AXP recently agreed to acquire Tock from Squarespace, Inc. SQSP for $400 million cash. Tock offers reservation, table management and event ticketing solutions to around 7,000 outlets, which is expected to complement AXP’s Resy business (acquired in July 2019).

This will likely help customers with reservations at high-end restaurants and exclusive venues. Per the agreement, AmEx and Squarespace will also collaborate to provide additional value to small businesses using American Express Cards.

AmEx has also agreed to buy technology company Rooam, which runs mobile payments, ordering and integrations with point-of-sale, marketing and loyalty systems used by restaurants and other outlets. The financial details of this acquisition are yet to be disclosed. Products like Rooam Tab, Rooam Pay and Rooam Order are expected to expand AXP’s mobile ordering and payment capabilities.

With these buyouts, AmEx is expected to strengthen its dining, travel, and entertainment footprint by enhancing its suite of digital tools for merchants. According to the company, restaurants are one of its largest Card Member spending categories within the Travel and Entertainment space. It reached $100 billion in volume last year and is expected to retain its momentum in the coming days.

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While investing in dining, travel, and entertainment platforms is expected to bring more premium and high-spending customers to AmEx’s network, it will also offer merchants tools to provide more personalized solutions for their customers.

Shares of American Express have gained 16.4% in the year-to-date period against the 2.3% decline of the industry.

Zacks Investment Research
Zacks Investment Research


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However, the company has seen an increase in reward expenses and card member services over the past several years. In the first quarter of 2024 alone, these two categories accounted for approximately 43.4% of the company's total expenses. Variable customer engagement and marketing expenses are likely to continue increasing its total costs.

Zacks Rank & Key Picks

American Express currently has a Zacks Rank #4 (Sell).

Investors interested in the broader Finance space may look at some better-ranked players like WisdomTree, Inc. WT and ChoiceOne Financial Services, Inc. COFS, both carrying a Zacks Rank #2 (Buy) now. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for WisdomTree’s 2024 earnings indicates 51.4% year-over-year growth. During the past two months, WT has witnessed three upward estimate revisions against none in the opposite direction. It met earnings estimates thrice in the past four quarters and beat once, with an average surprise of 2.3%.

The Zacks Consensus Estimate for ChoiceOne’s current-year earnings suggests a 7.1% year-over-year increase. During the past 60 days, COFS has witnessed one upward estimate revision against none in the opposite direction. The consensus mark for current year revenues also suggests a 7.1% jump from a year ago.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

American Express Company (AXP) : Free Stock Analysis Report

ChoiceOne Financial Services, Inc. (COFS) : Free Stock Analysis Report

Squarespace, Inc. (SQSP) : Free Stock Analysis Report

WisdomTree, Inc. (WT) : Free Stock Analysis Report

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Zacks Investment Research