HomeBusinessWhy JPMorgan Chase Stock Dropped 6% Today

Why JPMorgan Chase Stock Dropped 6% Today

Stock of JPMorgan Chase & Co. (NYSE:JPM) – America’s largest bank by both revenue and market capitalization – is tumbling 5.8% through 11:05 a.m. ET on Friday, despite the bank reporting big gains on both revenue and earnings for the first quarter of fiscal 2024.

Ahead of the quarter, analysts had expected JPMorgan to report earnings of $3.82 per share on revenue of $38.5 billion. But then the bank reported earnings of $4.63 per share (adjusted for one-time items; net income was $4.44) and revenues of $41.9 billion – a profit that was exceeded on all counts.

Highlights of JPMorgan’s fourth-quarter earnings results

CEO Jamie Dimon characterized his bank’s results as “strong” and noted that the difference between adjusted and net profits came from a $750 million “special assessment” by the Federal Deposit Insurance Corp. (FDIC) to help insure against future losses.

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Turnover increased by 9% year on year and (net) profit increased by 8%. The only bad news is that bank depositors are starting to revolt against the ultra-low interest rates that JPMorgan (still) pays on deposits, and are shifting money from JPMorgan savings accounts to higher-interest investments. In the long run, this threatens profits because JPMorgan may have to increase the interest rates it pays to win back deposits.

Otherwise, costs rose slightly (down 13% sequentially), but Dimon assured investors that both the bank’s credit costs and net interest income (down 4% sequentially) are on their way to “normalization.”

Is JPMorgan stock a buy?

As he navigated that path, Dimon highlighted the risks of high inflation, the potential for “quantitative tightening” from the Federal Reserve, and multiple geopolitical risks. But overall, he described the market as “favorable” and said JPMorgan remains a “strong pillar.” Matching words with action, the bank continues its share buybacks – $2 billion in share buybacks in the first quarter.

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With twelve times earnings and a dividend of 2.4% – but earnings expected to grow only 4% per year over the next five years – JPMorgan stock may not be the cheapest bank in the world. But it seems quite pillar-like to me.

Should You Invest $1,000 in JPMorgan Chase Now?

Consider the following before buying shares in JPMorgan Chase:

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JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Rich Smith has no position in any of the stocks mentioned. The Motley Fool holds and recommends positions in JPMorgan Chase. The Motley Fool has a disclosure policy.

Why JPMorgan Chase Stock Fell 6% Today was originally published by The Motley Fool

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