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American Express to acquire Tock from Squarespace for $400M

EditorBrando Bricchi
Published 06/22/2024, 02:54 AM
© Reuters.

NEW YORK - In a significant move within the digital hospitality space, Squarespace, the company known for providing a comprehensive platform for online business management, has agreed to sell Tock, a reservation and event management technology provider, to American Express (NYSE:AXP) for $400 million. Tock is recognized for its suite of services that cater to the hospitality industry, enabling businesses to manage reservations, waitlists, and tables effectively.

Matthew Tucker, Head of Tock, expressed confidence in the acquisition, noting American Express's commitment to the hospitality sector and the potential for Tock to provide enhanced value to customers through American Express's extensive network of diners. Tucker also acknowledged Squarespace's support since Tock joined the Squarespace family in 2021.

Squarespace's CEO, Anthony Casalena, reflected on the partnership with Tock and its focus on innovative products and customer care. He believes that Tock will continue to flourish under American Express's ownership.

As part of the acquisition, Squarespace and American Express will form a partnership aimed at delivering additional value to small businesses, particularly those using American Express Cards. This will include benefits through the Amex Offers program and other card member advantages.

The deal is currently pending customary closing conditions, including regulatory approval.

Squarespace, listed on the New York Stock Exchange as NYSE: SQSP, offers a variety of tools for online presence and business growth, including website creation, ecommerce, and marketing. Tock, which services over 7,000 customers, provides a comprehensive platform for the hospitality industry to drive revenue and manage customer relations effectively.

American Express, a globally integrated payments company, offers a wide range of products and services designed to enrich lives and aid business success. Its portfolio includes personal and business cards, travel services, and merchant services, among others.

The transaction is based on a press release statement and signifies a strategic shift for both Squarespace and American Express, with potential implications for the future of digital hospitality solutions.

In other recent news, American Express has made significant strides with the acquisition of Tock and Rooam, two technology platforms focused on enhancing the dining experience for its card members. The company aims to expand its digital offerings for merchants and restaurants, with the acquisitions set to add new capabilities to its existing dining platform. The financial terms of the Rooam acquisition remain undisclosed, while Tock was purchased for $400 million in cash, subject to customary adjustments.

Simultaneously, American Express reported an increase in delinquency rates for its U.S. Consumer and Small Business Card Member loans. 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.

Several financial firms have provided their analysis of 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. 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

In light of American Express's acquisition of Tock from Squarespace, investors and industry observers are keen to understand the financial health and strategic positioning of American Express (NYSE: AXP). With a robust market capitalization of $165.59 billion, American Express demonstrates significant industry presence. The company's P/E ratio, which currently stands at 18.96, aligns with an attractive PEG ratio of 0.67, suggesting that its earnings growth is being recognized as favorable when factored against its share price.

From a profitability standpoint, American Express has been successful over the last twelve months, as evidenced by a solid operating income margin of 20.45% and a consistent dividend payment streak spanning 54 years. This commitment to shareholder returns is complemented by a dividend yield of 1.22% and a notable dividend growth of 16.67% in the last twelve months as of Q1 2024. These financial metrics, combined with a six-month price total return of 25.37%, paint a picture of a company that is not only growing but also rewarding its investors.

Two particular InvestingPro Tips highlight why American Express's acquisition of Tock could be a strategic move. Firstly, American Express is trading at a low P/E ratio relative to near-term earnings growth, indicating potential for stock price appreciation as the market acknowledges its growth prospects. Secondly, as a prominent player in the Consumer Finance industry, American Express's expansion into digital hospitality solutions with Tock may further solidify its market position and create new avenues for revenue.

For readers interested in a more in-depth analysis, there are 7 additional InvestingPro Tips available for American Express at https://www.investing.com/pro/AXP. Utilize coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and gain access to exclusive insights that could inform your investment decisions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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