What's going on?

American Express (Amex), the credit card company, is in trouble. The stock fell 12% on Friday after it reported its financial results and decreased its profit estimates for 2017. The stock is at its lowest level since 2012.

What does this mean?

Amex is facing a bunch of challenges: declining corporate travel budgets and a strong US dollar have hurt its profits (because overseas profits are lower when converted back to US dollars). Also, its relationship with Costco is coming to an end � and that makes up 10% of its outstanding cards.

But that stuff was all known by investors. The cut to its 2017 profit outlook is disconcerting. Perhaps the scariest thing for investors is that Amex blames �increasing competition� for its woes. That might be an indication that it�s failing to innovate enough to keep up with the changing payments industry.

Why should I care?

The bigger picture: The payments industry is on the cusp of revolution. The use of services like PayPal, Google Wallet and Apple Pay are increasing and while they sometimes complement Amex�s business, they also pose a threat. It seems that Amex hasn�t determined its place in the emerging infrastructure of payments.

For the stock: A big investor cut its position and ran. Value-Act, an �activist� fund that has been credited with helping to turnaround Microsoft, reportedly sold out of the 1% of Amex that it bought just last year (according to CNBC). That�s a sign, perhaps, that it doesn�t see much scope for a turnaround. Warren Buffett is Amex�s largest shareholder � maybe he feels differently.