May. 9 at 4:15 PM
$WFC
WFC down nearly -19% YTD.
I expected WFC to trend similarly as it did in 2022 following the invasion of Ukraine. With the yield curve flattening (spread between long-term and short-term Treasury yields narrowing) things are not getting better as the bank struggles to meet revenue expectations - WFC missed on multiple revenues over the last 8 earnings. I expect the stock will bounce (Iran war relief rally), but holding gains will be difficult because business fundamentals are not good.
Scharf has done a poor job expanding the balance sheet nearly 1 year after asset cap removal. Relying on organic growth is a strategic mistake. The bank should acquire a wealth mgmt./IB business that can execute Scharf's stated goal to diversify and grow. Until then I expect WFC will continue to be a hostage of the yield curve. Good luck longs.
