Why Shares of Wells Fargo Are Sinking Today
Wells Fargo reported its second-quarter earnings this morning.
The bank beat earnings and revenue estimates.
However, management also lowered full-year guidance for net interest income.
10 stocks we like better than Wells Fargo ›
Shares of Wells Fargo (NYSE: WFC) are trading roughly 5.5% lower as of 10:44 a.m. ET today after the bank reported earnings results for the second quarter of the year earlier this morning.
Lowering net interest income guidance
Wells Fargo reported earnings per share of $1.60 on total revenue of roughly $20.8 billion. EPS beat FactSet estimates easily, while revenue came in slightly higher than estimates.
However, the stock sank after management lowered its full-year guidance for net interest income (NII), which is one of the larger sources of revenue at banks. NII is essentially the difference between the money banks make on interest from loans and other assets and what they pay out in interest on deposits and other funding sources.
Management is guiding for 2025 NII of roughly $47.7 billion, in line with 2024 NII. However, in the first quarter, management guided for 2025 NII to increase 1% to 3% from 2024 levels. The decline is due to lower NII in the bank's markets business, which management says will be offset by higher fee income.
Not too concerned
Wells Fargo had been trading close to a five-year high valuation at just under 2 times tangible book value, a term referring to a bank's net worth, so there was little margin for error. Ultimately, though, I am not overly concerned about lower NII guidance, especially because NII can be volatile and the decline should be offset by higher fee income.
On a positive note, credit metrics improved from the first quarter, so I think investors can buy the dip here due to a favorable backdrop for the large-cap financials.
Should you invest $1,000 in Wells Fargo right now?
Before you buy stock in Wells Fargo, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Wells Fargo wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $680,559!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,005,670!*
Now, it's worth noting Stock Advisor's total average return is 1,053% — a market-crushing outperformance compared to 180% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor.
See the 10 stocks »
*Stock Advisor returns as of July 15, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
National Post
20 minutes ago
- National Post
The Open Group Launches The Open Group Open Digital Transformation™ Forum
Article content Article content SAN FRANCISCO — The Open Group, the vendor-neutral technology consortium, has today announced the formation of The Open Group Open Digital Transformation™ Forum (ODXF). This new initiative will support enterprise Digital Transformation by developing and popularizing pragmatic, open standards in this increasingly valuable and challenging space. Article content By establishing clear guidelines for Digital Transformation initiatives and enabling cross-industry collaboration to share insights and best practices, ODXF aims to ensure that a greater share of Digital Transformation investment globally delivers effective returns on investment and measurably positive impacts on cultural, workforce, and technological changes. Article content 'The vast majority of enterprises today are engaged in Digital Transformation initiatives, with significant global spend in Digital Transformation,' commented Rashed Al-Yami, Governing Board Member of The Open Group and Manager Digital Platforms & Architecture Design Division at Aramco. 'By developing open standards through vendor-neutral collaboration, ODXF can influence the Digital Transformation agenda towards more rigorous and successful practices.' Article content Key focus areas for ODXF include developing standardized frameworks for Digital Transformation initiatives, ensuring consistency, and producing reference architectures which organizations can incorporate in order to make their own Digital Transformation journeys more agile and responsive. Article content The Forum will also collaborate on establishing a body of knowledge, which incorporates a range of documents designed to help users operationalize the standard, as well as ultimately delivering a certification program for practitioners to demonstrate that they understand and can apply best-in-class approaches to Digital Transformation. Article content 'Digital Transformation is not a new term, but the emergence of a range of disruptive technologies, from AI to quantum computing, has made it more urgent than ever for businesses to find a clear guiding path towards proven approaches to this challenge,' said Steve Nunn, President and CEO of The Open Group. 'Our track record of bringing industry stakeholders together in a neutral, collaborative space means that The Open Group is well placed to add value to one of the world's major areas of investment.' Article content The Open Group is a global consortium that enables the achievement of business objectives through technology standards and open source initiatives by fostering a culture of collaboration, inclusivity, and mutual respect among our diverse group of 900+ memberships. Our Membership includes customers, systems and solutions suppliers, tool vendors, integrators, academics, and consultants across multiple industries. Article content Article content Article content Article content Contacts Article content Media contact Article content Article content Article content Article content
Globe and Mail
20 minutes ago
- Globe and Mail
VAALCO Schedules Second Quarter 2025 Earnings Release and Conference Call
HOUSTON, July 28, 2025 (GLOBE NEWSWIRE) -- VAALCO Energy, Inc. (NYSE: EGY; LSE: EGY) ('Vaalco' or the 'Company') today announced the timing of its second quarter 2025 earnings release and conference call. The Company will issue its second quarter 2025 earnings release on Thursday, August 7, 2025 after the close of trading on the New York Stock Exchange and host a conference call to discuss its financial and operational results on Friday morning, August 8, 2025 at 9:00 a.m. Central Time (10:00 a.m. Eastern Time and 3:00 p.m. London Time.) Interested parties in the United States may participate toll-free by dialing (833) 685-0907. Interested parties in the United Kingdom may participate toll-free by dialing 08082389064. Other international parties may dial (412) 317-5741. Participants should ask to be joined to the 'Vaalco Energy Earnings Conference Call.' This call will also be webcast on VAALCO's website at An audio replay will be available on the Company's website following the call. About Vaalco Vaalco, founded in 1985 and incorporated under the laws of Delaware, is a Houston, Texas, USA based, independent energy company with a diverse portfolio of production, development and exploration assets across Gabon, Egypt, Côte d'Ivoire, Equatorial Guinea, Nigeria and Canada. For Further Information
Globe and Mail
an hour ago
- Globe and Mail
Will Starlink IPO Before SpaceX? What Investors Should Know.
Key Points Starlink operates as a subsidiary of SpaceX, and specializes in satellite internet services. There are multiple ways that SpaceX could take Starlink public while still maintaining majority control of the business. Industry estimates suggest that Starlink is SpaceX's largest source of revenue and is generating positive free cash flow, making now an interesting time to consider an IPO. These 10 stocks could mint the next wave of millionaires › Be it in investing or life in general, people often want things that they can't have. When it comes to stocks, it's not uncommon for investors -- particularly retail investors -- to fawn over the prospects of owning equity in high-profile start-ups. Unfortunately, these types of investments are generally reserved for venture capital (VC) firms, private equity funds, or accredited investors. One of the most popular start-ups in the world is Tesla CEO Elon Musk's space exploration company, SpaceX. As of this writing, industry research suggests that SpaceX is the most valuable private technology company in the world -- having achieved a valuation of $350 billion earlier this year. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » In addition to rocket ships, SpaceX also provides satellite internet services through a subsidiary business, called Starlink. Over the last few years, Starlink's popularity has fueled speculation that it could potentially go public. But seeing as how Starlink operates within the broader SpaceX orbit, how would such a transaction even work? Let's dig into the mechanics around a potential Starlink initial public offering (IPO) and assess how and why such a deal could benefit SpaceX. SpaceX, Starlink, and retail investors: It's a complicated situation A concept that retail investors may not fully understand is that when you invest in a business -- especially one that is diversified -- you effectively gain a form of ownership in the various segments of the company. For example, if you're interested in autonomous vehicles and want to invest in Waymo, the easiest way to do that is by owning Alphabet stock. Waymo is a subsidiary of Alphabet, and so owning the stock provides investors with exposure to the company's entire ecosystem including Google, YouTube, Google Cloud, Waymo, and much more. Along the same lines, if SpaceX were to go public, investors would be able to buy stock through their brokerage account and have an ownership stake to the entire business (including exposure to Starlink). But what would a situation look like that features a completely separate initial public offering for Starlink? There are multiple different ways that SpaceX could structure such a deal. One option could be for SpaceX to partially spin off Starlink as its own legal entity and subsequently offer a certain percentage of the business through an IPO. Perhaps a more interesting structure would be for SpaceX to create a tracking stock just for the Starlink division. In such an event, investors could buy shares in stock that only tracks the performance of Starlink as opposed to the entire SpaceX operation. The broader point here is that taking Starlink public before SpaceX is entirely doable... but it's also complicated and requires some creative thinking as it pertains to deal structure. Taking this one step further, what would SpaceX's motivation be for taking Starlink public? Does a Starlink IPO even make sense for SpaceX? One benefit of taking Starlink public is that it would provide investors with some autonomy regarding how they want to allocate capital. In other words, by listing Starlink and SpaceX as separate public entities, investors have a choice over buying exposure into a lumpy aerospace and defense business (SpaceX) or a subscription-based, recurring revenue internet services company (Starlink). As a private company, SpaceX is not required to disclose its financial profile. With that said, sending rocket ships to space is a complex, time-consuming ambition. Moreover, space exploration is not exactly a linear type of business. What I mean by all of this is that SpaceX's core business doesn't necessarily have predictable revenue streams, but it requires hefty investments across research and development (R&D) and capital expenditures (capex) on an ongoing basis. According to a report published by Payload Space earlier this year, Starlink is believed to be the largest source of revenue within the entire SpaceX business. In addition, it's also suggested that the overwhelming majority of Starlink's revenue stems from recurring subscription services. With that in mind, Starlink's actual profitability profile is not entirely known. Reporting from Bloomberg has suggested that Starlink's profitability profile is not robust given the high costs of building and launching satellites. But on the other side of the equation, some would argue that Starlink's internet subscriptions help offset the maintenance costs affiliated with low-margin satellites. While the company's precise financial picture independent of SpaceX is not entirely known, I remain optimistic that a Starlink IPO would be well received. A Starlink IPO could represent a capital infusion for SpaceX while still allowing the company to retain control of Starlink from an ownership and governance perspective. In other words, SpaceX can leverage proceeds from a Starlink IPO to reinvest in the core space exploration business. This would permit for more aggressive investments in the core rocket business, ultimately helping SpaceX intensify the competitive landscape with the likes of Blue Origin or Rocket Lab. Given Starlink's reported explosive growth and SpaceX's ability to maintain control over the satellite business, I think Musk should seriously consider taking Starlink public sooner rather than later. Don't miss this second chance at a potentially lucrative opportunity Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $449,961!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $40,603!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $636,628!* Right now, we're issuing 'Double Down' alerts for three incredible companies, available when you join Stock Advisor, and there may not be another chance like this anytime soon. See the 3 stocks » *Stock Advisor returns as of July 21, 2025
