Morgan Stanley Shares Fell Thursday, Here’s Why

Morgan Stanley
Headquarters of Morgan Stanley at night on Broadway Avenue next to Times Square with large advertising screens in Manhattan in New York City, USA

Morgan Stanley (NYSE:MS)

Morgan Stanley announced fourth-quarter financial results that fell short of Wall Street expectations early Thursday. The New York-based investment bank said the results were hampered by difficulties in trading that also took a toll on several other lenders in the U.S.

Morgan Stanley stock declined 5.6% in premarket hours. On Wednesday, the stock swung to the bull-market territory after gaining 4.8% in afternoon trading. The jump was triggered by a rally in shares of rival banking giants Bank of America Corp. (7.5%) and Goldman Sachs Group (9.1%), after the two posted upbeat results.

However, Morgan Stanley on Thursday gave away all of its gains, going down 4.56% to $42.48 as of 9:35 a.m. in New York.

MS Earnings & Outlook

Morgan Stanley posted a profit of $1.53 billion, or 80 cents per share, compared with $643 million, or 26 cents per share, in the prior-year period. Earnings, adjusted to account for discontinued operations and pretax gains, came to 73 cents per share. Analysts surveyed by Refinitiv had estimated adjusted earnings of 89 cents per share.

Total revenue came to $8.5 billion, down 10% from $9.5 billion a year ago. Wall Street was for companywide revenue of $9.3 billion for the three months ended on December 31, 2018. Wealth Management revenue was $4.14 billion, down 6% from $4.41 billion a year earlier and below estimates of $4.45 billion.

Institutional Securities unit generated revenues of $3.84 billion, below estimates of $4.33 billion. Meanwhile, Investment Management segment surpassed expectations for revenues of $656.7 million after posting $684 million.

Morgan Stanley CEO Comments

James P. Gorman, Chairman and Chief Executive Officer, said, “In 2018 we achieved record revenues and earnings, and growth across each of our business segments – despite a challenging fourth quarter. We delivered higher annual returns, producing an ROE of 11.8% and ROTCE of 13.5%, as we continued to invest in our businesses. While the global environment remains uncertain, our franchise is strong and we are well positioned to pursue growth opportunities and serve our clients.”

Morgan Stanley Profile

Morgan Stanley provides investment banking products and services to its clients and customers including corporations, governments, financial institutions, and individuals. It operates through the following business segments: Institutional Securities, Wealth Management, and Investment Management. The Institutional Services segment provides financial advisory, capital-raising services, and related financing services on behalf of institutional investors.

The Wealth Management segment offers brokerage and investment advisory services covering various types of investments, including equities, options, futures, foreign currencies, precious metals, fixed-income securities, mutual funds, structured products, alternative investments, unit investment trusts, managed futures, separately managed accounts, and mutual fund asset allocation programs.

The Investment Management segment provides equity, fixed income, alternative investments, real estate, and merchant banking strategies. The company was founded by Harold Stanley and Henry S. Morgan on September 16, 1935 and is headquartered in New York, NY. – CNN Money