The stock went down. Someone decided this meant you should buy it. This is the entire thesis.
Wells Fargo reported third-quarter earnings that were "not perfect" which is analyst-speak for "bad but we can't say bad because we need them to buy ads." CEO Charlie Scharf is executing a turnaround that will definitely work this time because the previous seventeen turnarounds were just practice rounds. The stock pulled back and now the same people who rated it a hold at higher prices want you to buy it at lower prices because that's how ratings work when you need to justify your existence.
The beautiful part is the phrase "nice entry point" which appears in every single upgrade after a stock drops. It's never a nice entry point when the stock is up twenty percent. Only when it's down. Gravity equals opportunity in this business. If Wells Fargo dropped another fifteen percent tomorrow they'd upgrade it again and call it an even nicer entry point. At zero dollars per share it would be the nicest entry point of all time.
Charlie Scharf's turnaround will bear more fruit ahead. Not now. Not in the quarter they just reported. Ahead. Always ahead. The fruit is perpetually three to six months away like a mirage in the desert. Retail traders will chase this upgrade because someone on CNBC said the word "turnaround" with a straight face and showed a chart with an arrow pointing up and to the right.
The stock pulled back so they upgraded it. The stock went up so they'll probably downgrade it. This is technical analysis except they pretend it's fundamental analysis and charge institutional clients six figures a year for the privilege of reading it. You're getting it for free which means you're the fruit they were talking about.
Photo by Jack Cohen on Unsplash
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