Founded in 1852, by Henry Wells and William Fargo, Wells Fargo is an American diversified financial services company with operations in over 35 countries, serving over 70 million customers.
The company is headquartered in San Francisco, California and offers personal, small business and commercial financial services through three distinct operating segments: Community Banking, Wholesale Banking, and Wealth & Investment Management.
Wells Fargo has had a colourful history and is now, as of December 2020, among the ‘Big Four Banks’ in the United States alongside Citigroup, Bank of America, and JPMorgan Chase.
The company was formed to handle banking and express services occasioned by the California Gold Rush at the time.
From the beginning, Wells Fargo offered diverse but handy services to its customers ranging from the buying and selling of gold as well as freight services that included general forwarding and general banking.
Wells Fargo enjoyed a period of incredible growth at the time as it built a reputation as a reliable, professional and trustworthy company.
At the turn of the 20th century, the company separated its banking and express services. It focused heavily on its banking and financial operations and eventually spun off its express services entirely.
Wells Fargo accelerated its growth through innovations as well as mergers and acquisitions. The bank is credited with being the first company to pioneer internet banking services in 1995.
Wells Fargo, as known at the end of 2020, is a product of hundreds of M&As with notable deals being the 1998 merger with Northwest Corporation worth over $34 billion and the 2008 acquisition of Wachovia for over $15 billion.
Wells Fargo & Company is listed on the NYSE where it trades under the ticker symbol WFC. It falls in the Financial Services sector, under the Banks-Diversified industry.
Wells Fargo Stock History
Wells Fargo has had multiple stock splits in its history, with the last one being a 2-for-1 split performed on August 11th, 2006. Throughout its history, Wells Fargo implemented aggressive stock splits when its share price sustained above $50.
The last stock split was performed when the price of WFC was trading around $70, with the resulting split sending the stock price back to circa $30. WFC maintained that price but quickly dipped to below $25 in mid-2008 as the global financial crisis took shape.
The acquisition of Wachovia buoyed investors who sent the stock back to just below $40 later that year, but the financial crisis provided headwinds that sent the stock plunging to below $10 by March 2009. The stock then, however, kick-started an impressive recovery, breaching the $40 barrier in May 2013 and continuing the multi-year bull run that saw it print an all-time high above $65 in January 2018. The subsequent retracement, coupled with the effects of the 2020 coronavirus pandemic, has seen the stock retreat from those highs to trade at circa $30 yet again.
Wells Fargo has been a consistent dividend payer over the years. But it is worth pointing out that the company is always quick to slash or raise dividends depending on its business performance and fundamental outlook.
How to Trade WFC Stock
Here are some of the factors to consider when trading WFC stock:
- Legislation and Taxation
In the aftermath of the 2008 financial crisis, the financial industry has seen increased regulatory oversight as the US government is keen to prevent any such scenario from playing out in the future. As a major US bank and the leading mortgage lender, Wells Fargo’s revenues and margins are always susceptible to legislative and taxation policies that can change on a whim.
- Economic Conditions and Monetary Environment
As a banking stock, WFC reacts faster to underlying economic conditions as well as the monetary policy environment. Overall good economic conditions (growing consumer and business spending) are a positive fundamental for the WFC stock, whereas overall weak economic conditions (declining consumer and business spending) are a negative fundamental for the stock. In terms of monetary environment, a high-interest regime provides a massive headwind for the stock whereas a low-interest regime ensures the growth of Wells Fargo services and thus is a huge tailwind for its stock.
- Lawsuits and Negative PR
While it has been a tough environment for financial stocks in recent years, WFC has suffered even more because of expensive lawsuits and a negative brand image. One of the more recent ones is the 2016 fake accounts scandal that resulted in fines totalling over $3 billion. The company even had to deal with a Federal Reserve-imposed limit on the acquisition of assets and access to funds. Investors abhor negative headlines, and ones like above can particularly trigger massive selloffs.
- Periodic Earnings Reports
WFC stock is known to be very sensitive to earnings reports. It usually posts huge price movements, even gaps, during these fundamental events. Wells Fargo’s fiscal year runs from January to December, with the company releasing quarterly, semi-annual and annual earnings reports to update investors on their business health. When results beat expectations, WFC stock will edge higher, whereas weaker-than-expected results will always pile downward pressure on the stock.
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** Disclaimer – While due research has been undertaken to compile the above content, it remains an informational and educational piece only. None of the content provided constitutes any form of investment advice.