Why Wells Fargo Stock Slumped by Almost 5% on Wednesday
Key Points
The prominent bank unveiled its fourth quarter of 2025 results.
These were mixed, as the company beat on earnings but whiffed on revenue.
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Bank earnings season is upon us, and one of the so-called Big Four lenders published its fourth quarter of 2025 results on Wednesday morning. Wells Fargo (NYSE: WFC) posted mixed results, and investors were concerned enough about the bank's performance to sell out of its stock. The company's shares closed the day 4.6% lower in price.
Mixed results for the final frame of 2025
For the quarter, Wells Fargo's total revenue was $21.29 billion, representing a 4% year-over-year increase. Net income in accordance with generally accepted accounting principles (GAAP) for the period was $5.36 billion ($1.76 per share), bettering the year-ago figure by almost 6%.
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These rises were aided by a 5% increase in average loans to nearly $956 billion and a 4% climb in average deposits to just under $1.38 trillion.
Although Wells Fargo topped the $1.66 per share consensus analyst estimate for GAAP profitability, it missed the collective revenue forecast. As a group, pundits tracking the stock were expecting the bank to earn $21.64 billion.
The major banks are operating in a generally favorable environment, where the domestic economy, although experiencing some headwinds, continues to thrive. Given that, plus the fact that Wells Fargo had its long-standing asset cap (imposed by the Federal Reserve) lifted last June, they were likely expecting higher growth figures.
Reasons to be cheerful
Nevertheless, several developments were encouraging for Wells Fargo. The company highlighted its credit card business, noting that cardholder spending is on the rise and customer numbers are increasing -- the bank reported that its new card accounts increased by a robust 20%. Automobile lending was also a hot segment, with a 19% pop in total balances.
I feel Wells Fargo suffered in comparison to the performance of the other top four banks, all of which performed quite well in their final quarters of 2025. With that, it's worthy of consideration for investors looking for something of a sleeper play inside the big four.
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Wells Fargo is an advertising partner of Motley Fool Money. Eric Volkman 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.
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