Why JPMorgan Chase Stock Sank 6% Today

Stock of JPMorgan Chase & Co. (NYSE: JPM) -- America's biggest bank both by revenue and by market cap -- is tumbling on Friday, down 5.8% through 11:05 a.m. ET despite the bank reporting big beats on both revenue and earnings for its first quarter of fiscal 2024.

Heading into the quarter, analysts had JPMorgan pegged for a $3.82-per-share profit on revenue of $38.5 billion. But then the bank reported profits of $4.63 per share (adjusted for one-time items; net earnings were $4.44), and revenue of $41.9 billion -- an earnings beat by any measure.

JPMorgan Q4 earnings highlights

CEO Jamie Dimon characterized his bank's results as "strong," noting the difference between adjusted and net earnings came from a $750 million "special assessment" by the Federal Deposit Insurance Corp. (FDIC) to help insure against future losses.

Revenue rose 9% year over year, and (net) earnings were up 8%. About the only bad news is that bank depositors are starting to rebel at the ultra-low interest rates JPMorgan (still) pays on deposits, and shifting money out of JPMorgan savings accounts to higher-yielding investments. Long-term, this poses a threat to profits, as JPMorgan may have to raise the interest rates it pays, to win back deposits.

Otherwise, expenses grew a bit -- 13% sequentially -- but Dimon reassured investors that both the bank's credit costs and its net interest income (down 4% sequentially) are on a path to "normalization."

Is JPMorgan stock a buy?

Peering down that path, Dimon highlighted risks from high inflation, the potential for Federal Reserve "quantitative tightening," as well as multiple geopolitical risks. But overall, he described the market as "favorable," and said JPMorgan remains a "pillar of strength." Matching actions to words, the bank continues to buy back its own stock -- $2 billion in share repurchases in the first quarter.

At 12 times earnings, and paying a 2.4% dividend -- but expected to grow earnings only 4% annually over the next five years -- JPMorgan stock may not be the cheapest bank in the world. But it does look pretty pillar-y to me.

Should you invest $1,000 in JPMorgan Chase right now?

Before you buy stock in JPMorgan Chase, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and JPMorgan Chase wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than tripled the return of S&P 500 since 2002*.

See the 10 stocks

*Stock Advisor returns as of April 8, 2024

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 has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.