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SUMMARY
Wells Fargo (NYSE: WFC) stock declined by about 19% between 8th March 2020 and 30th March 2020 ( vs. a 12% decline in the S&P 500), and the stock is down almost 21% since February 1 after the WHO declared a global health emergency in light of the coronavirus spread (vs. about 24% decline in the S&P 500 since then).There were two distinct trends driving the sell-off. Firstly, the increasing number of Coronavirus cases in the U.S and other countries outside China is causing mounting concerns of a global economic slowdown (on Wednesday, March 11, WHO declared coronavirus a pandemic outbreak creating further panic in the markets). Secondly, a sharp decline in crude oil prices after Saudi Arabia increased production in a price war with Russia spooked the investors further.Drawing lessons from the 2008 financial crisis, we see WFC stock declined from levels of around $26 in October 2007 (the pre-crisis peak) to levels of around $9 in March 2009 (as the markets bottomed out). Implying WFC stock lost as much as 65% from its approximate pre-crisis peak. This marked a sharper drop than the broader S&P, which fell by as much as 51%.We compare the performance of Wells Fargo vs the S&P 500 in this analysis here.
2020 Coronavirus/ Oil Price War Crisis
Timeline of 2020 Crisis So Far
12/12/2019: Coronavirus cases first reported in China1/31/2020: WHO declares global health emergency.2/3/2020 to 3/27/2020: S&P 500 sees ~21% drop as COVID-19 cases accelerate outside China. Doesn't help that oil prices crash in mid-March amid Saudi-led price war
Wells Fargo & Co Performance During 2020 Coronavirus/Oil Price War Crisis
Wells Fargo stock declined by about 19% between 8th March 2020 and 30th March 2020 and the stock is down by about 36% since February 1, after the WHO declared a global health emergency.
WFC Stock: Key Values During 2020 Crisis
% Change for Key Dates: 2020 Crisis
S&P 500 Index Performance During 2020 Coronavirus/Oil Price War Crisis
The S&P 500 declined by 12% between March 8 and March 30, 2020 and it has fallen by 21% since February 1st.
S&P 500 Index: Key Values During 2020 Crisis
% Change for Key Dates: 2020 Crisis
2007-08 Financial Crisis
Timeline of 2007-08 Crisis
10/1/2007: Approximate pre-crisis peak in S&P 500 index9/1/2008 - 10/1/2008: Accelerated market decline corresponding to Lehman bankruptcy filing (9/15/08)3/1/2009: Approximate bottoming out of S&P 500 index1/1/2010: Initial recovery to levels before accelerated decline (around 9/1/2008)
Wells Fargo & Co Stock Performance Over 2007-08 Financial Crisis
WFC stock declined from levels of around $26 in October 2007 (the pre-crisis peak) to $9 in March 2009 (as the markets bottomed out) and recovered to levels of about $21 in early 2010.Through the crisis, WFC stock declined over 65% from its approximate pre-crisis peak. This marked a sharper decline than the broader S&P, which fell by as much as 51%.Wells Fargo stock saw substantial recovery from the lows, rising by over 124% between March 2009 and January 2010. The growth was much higher than the S&P, which rose by about 48% over the same period.
WFC Stock: Key Values During 2007-08 Crisis
% Change for Key Dates: 2007-08 Crisis
WFC Stock: Cumulative % Change from 10/1/2007
S&P 500 Performance Over The 2007-08 Financial Crisis
The S&P declined from levels of around 1540 in October 2007 to levels of around 760 in March 2009, and recovered to levels of 1120 by January 2010. Through the crisis, the S&P declined by as much as 51% from its approximate pre-crisis peak.
S&P 500 Index: Key Values During 2007-08 Crisis
% Change for Key Dates: 2007-08 Crisis
S&P 500 Index: Cumulative % Change from 10/1/2007
Conclusion
While Wells Fargo stock has declined due to the Coronavirus/Oil Price War crisis, going by trends seen during the 2008 slowdown, it has a potential upside of around 25% as the crisis winds down and the stock partially recovers back to pre-coronavirus levels.