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Morgan Stanley Fell More than 5%: What Went Wrong in Q4?


Jan. 17 2019, Updated 12:00 p.m. ET

Morgan Stanley

Morgan Stanley (MS) released its fourth-quarter results early on January 17. The bank missed analysts’ consensus estimates for its earnings and revenues. The adjusted earnings miss resulted in a sell-off in Morgan Stanley stock. At 10:48 AM EST, Morgan Stanley was trading with 5.6% day losses. At the same time, JPMorgan Chase (JPM), Bank of America (BAC), and Goldman Sachs (GS) fell 0.5%, 0.4%, and 1.2%, respectively. The S&P 500 Index and the NASDAQ Composite Index (VTI) were trading on a mixed note without any major change for the day.

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Key highlights

In the fourth quarter, Morgan Stanley’s adjusted earnings fell 4.8% YoY (year-over-year) to $0.80 per share—lower than analysts’ consensus estimate of $0.89.

Morgan Stanley’s adjusted revenues in the last quarter fell 10.0% YoY to $8.54 billion—much lower than analysts’ estimates of $9.29 billion. The bank blamed high global market volatility, weakness in credit and rates products, and a decline in investment banking and fixed-income revenues for hurting its fourth-quarter results.

While trying to reassure investors, Morgan Stanley CEO James Gorman said that “2018 was a great year that finished on a disappointing note.” He also said, “We do not believe the fourth quarter is the new normal.”

Morgan Stanley’s weak results made broader market investors worried. Unlike Morgan Stanley, Bank of America and Goldman Sachs reported solid fourth-quarter results on January 16.


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