Why Shares of Wells Fargo Are Sinking Today

Key Points

• 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.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Image source: Getty Images.

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

Wells Fargo is an advertising partner of Motley Fool Money. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.