Should You Invest in Wells Fargo?

PHOTO CREDIT: Wells Fargo

OVERVIEW

Why You Should?

  1. Wells Fargo currently manages over 1.9 trillion dollars in assets through all of its channels combined. This makes Wells Fargo one of the largest banks in the world. Because Wells Fargo makes money by taking fees for managing assets, the company will see a good stream of recurring revenue from its asset management. This will also benefit investors in the company.
  2. Wells Fargo is an extremely popular middle-class bank. According to Wells Fargo, the company offers financial services to 1 in 3 households in the United States and over 10% of all small to medium-sized businesses. This wide reach across the nation will benefit the company’s future growth and will also benefit investors in the company.
  3. The Federal Reserve will most likely look to increase interest rates before the year ends. This action shows that the economy is starting to pick up the pace and strengthen after the pandemic. High-interest rates usually help banks boost their margins as they can start charging more for new loans. In addition to this, a strengthening economy will also benefit banks.

Why You Should Not?

  1. The company unraveled after it was found out that it was making additional accounts for customers without consent in order to boost quarterly numbers. This scandal caused the company’s stock price to crash and regulators around the world to sanction and charge the company. This has negatively impacted the company and its investors.
  2. Even though the scandal was in 2016, the company still faces fallout for it. Recently, the company was charged a 250 million dollar fine as regulators were not happy with the company’s handling and recovery operation stemming from the scandal. In addition to this, a cap (2 trillion) on the number of assets that it can manage will also hurt the company and investors.

MY OPINION

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.