CE 100 Index Gains 5.3% as BNPL, Amex Lead the Charge

Earnings season has taught us that the death of consumer spending has been greatly exaggerated.

Much depends on where you look, of course.

December’s latest macro data shows that consumers pulled back during the holiday shopping season, and the month showed a 0.2% drop in spending vs. November. But spending via credit cards and buy now pay later conduits continued to gain ground overall, as measured in various earnings and company updates.

A slowdown may be in the offing, but growth is still in the cards, literally and figuratively.

All Pillars Gain Ground

To that end, the CE 100 Index soared 5.3% last week. All pillars were higher, and payments-related names led the pack, as the group was up 7.8%. That rally outpaced the 4.8% advance seen in the NASDAQ.

Sezzle soared 28.5%. The company said in a release last week that revenues for December were up nearly 16% year over year and 1.7% above November’s levels.

The company also said that it achieved profitability for the second month in a row.

And in terms of credit metrics, Sezzle also said that for the fourth quarter, the provision for uncollectible accounts as a percentage of underlying merchant sales is expected to be 1.5% or less – which the firm noted is a “significant improvement” compared to 3.5% a year ago.

American Express was 13.7% higher. As noted in our coverage of the payment network’s earnings on Friday (Jan. 27th), credit continues to be a preferred payment method among younger consumers.

Billed business, a measure of card spending that includes transactions and cash volumes, was up 15% to $357 billion in the aggregate. Travel and entertainment spending was 112% of fourth-quarter 2019 levels. And as management noted on the conference call, younger generations have been enthusiastic about using their cards, as millennials and Generation Z consumers’ spending was up 30% year on year.

Affirm rounded out the top three names in the payments sub-sector with a 13.6% boost. Kayak and Affirm said this week that to offer travelers payment flexibility amid a 40% year-over-year increase in the cost of plane tickets. The company partnership lets travelers split the total cost of flights, lodging and rental cars/car sharing greater than $150 into monthly payments (Booking Holdings, which owns Kayak, saw its stock gain 5% this past week.).

Visa also pulled the pillar higher, up 3.2%. Visa reported fiscal first-quarter results that showed credit volumes, in constant dollar terms, was up 11%, to $1.5 trillion, outpacing debit, which grew 3%, to just under $1.5 trillion. New payment flow related revenues were up more than 20%. U.S. payments volume was up 9% year over year and 44% over 2019 in constant dollars in a sign of continued consumer resilience.

“Enabler” names trailed payment companies’ stock surge only slightly, with a 7.5% gain. Within this segment, excitement over artificial intelligence (AI)-driven initiatives helped push C3.ai 31% higher, as the U.S. and the European Union have announced joint efforts to use artificial intelligence to help improve agriculture and healthcare, among other sectors. “Movement” focused companies, which were up 7.3% as a group, were buoyed by Tesla’s 33% rally spurred by comments from CEO Elon Musk, who said that the company is on track to produce 2 million vehicles this year.

Banking, as the “worst” performing sector, was a bit more than 1% higher. Positive performance from the likes of J.P. Morgan Chase (up 3.8%) and Citigroup (up 1.5%) offset the week’s 5% loss in LendingClub.  LendingClub, in its own report, showed that higher interest rates are cutting into investors’ demand to buy loans. Marketplace revenue was down 28% as a result. Quarterly loan originations were $2.5 billion in the latest quarter, down from $3.1 billion last year.