American Express reported a 38 percent decline in earnings for the fourth quarter, after the market closed on January 21. Investors punished the stock on January 22, driving the price down 12.1 percent, to close at $55.06 per share.

In the earnings release, American Express CEO Kenneth Chenault cited “intense competition” in the payments industry and “cyclical factors” in the economy for the company’s earnings decline. And he said the company will cut $1 billion in expenses by 2017 to try to jumpstart profits.

Profits are being squeezed right now by merchants who don’t want to pay high fees anymore when they take American Express cards, and by customers who want ever-higher rewards for using them.

Equity analyst Jim Sinegal at Morningstar said American Express faces significant competitive challenges, as evidenced by the recent loss of its exclusive — and lucrative — partnership with Costco.

“American Express — when it was negotiating against small restaurants, for example — had a lot of bargaining power.” said Sinegal. “Now, American Express is talking to the Costcos and Walmarts of the world, to a few big airlines, and the company’s bargaining position isn’t as strong as it’s been.”

He said that in ever-more consolidated industries — like air travel and hotels — those vendors now have the upper hand in fee negotiations. 

Consumers, meanwhile, have become more frugal and savvy in recent years. They can shop online for cards with low interest rates and fees, and find cards with rewards (like airline miles) that are most to their liking.

Matt Schulz, senior analyst at CreditCards.com, said American Express is also losing its preeminence among big-spenders, who used to regard having one of the company’s high-fee gold or platinum cards as a sign that they’d “made it” financially.

“You have the MasterCard Black card, the Citi Prestige card,” said Schulz. “You’re seeing other banks and issuers play in that playground that used to be really dominated by American Express.”

But banking equity analyst Erik Oja at S&P Capital IQ kept his “buy” recommendation on American Express stock after the earnings report. He cited several factors that he believes will turn in American Express’s favor in coming quarters. Specifically, Oja thinks oil (and gasoline) prices will move higher, increasing revenue for card-issuers; the U.S. dollar will weaken, which would in turn increase profits from foreign-currency transactions overseas; and U.S. consumers will run up higher balances on their credit and charge cards.

“As the American consumer has paid down a lot of debt and FICO scores have increased,” Oja said, “spending will also increase.”