Wells Fargo Reports Weaker Earnings But Still Its Stocks Surge Significantly

It was on Friday when Wells Fargo posted its earnings for the third quarter. It was not a good sight for the investors as Wells Fargo shared below expectation earnings.

As the earnings were weaker, it was expected that the investors would withdraw from making investments in its shares. This would eventually lead to a strong sell-out in Wells Fargo’s shares.

However, the outcome was completely different from what was expected. Instead of moving down, the share prices for Wells Fargo ended up feeling a significant push.

Weaker Earnings

The executives at Wells Fargo reported that the earnings figures for the third quarter did not meet expectations.

Wells Fargo executives revealed that they had to put $800 million aside that would act as credit reserves. Although Wells Fargo failed to meet the earnings expectations, it did manage to increase its interest income.

As a result of that, the overall revenues that Wells Fargo generated managed to cross the expectations set by the analysts. With revenues coming in stronger than expected, Wells Fargo’s shares have surged.

Earnings Reported by Wells Fargo

For the third quarter, Wells Fargo reported that the earnings it generated were 85 cents per share. This is 27.4% lower than the earnings Wells Fargo generated in the same quarter in 2021.

The analysts had expected that Wells Fargo would be able to generate earnings worth $1.09 per share.

Huge Fine Paid by Wells Fargo

It was the year 2020 when Wells Fargo was imposed with a huge fine. Wells Fargo was accused of being involved in illegal and fraudulent sales tactics.

The particular case had been referred to as the ‘fake account’ scandal. It was the US Securities and Exchange Commission and the US Department of Justice who imposed the $3 billion fine on Wells Fargo.

Revenues Generated by Wells Fargo

For the third quarter, Wells Fargo reported that it generated revenue worth $19.05 billion. Compared to the previous year’s third quarter, Wells Fargo generated 3.6% more revenue.

The officials confirmed that it was due to the 36% increase in the interest net income that helped their company generate stronger revenues. Their net interest income alone has risen to $12.1 billion.

Wells Fargo has set aside several hundred million ever since it got fined to pay it off. The company is also setting aside funds so it has enough funds to deal with economic headwinds.

Increase in Share Prices

Despite sharing weaker earnings, Wells Fargo recorded significant gains in its share prices. In the latest trading session, Wells Fargo’s shares surged by 3.15%.