Unshackled Wells Fargo Fights to Regain Momentum Lost in Penalty Box

Wells Fargo, one of the largest banking institutions in the United States, saw its shares rise by over 2% early Wednesday, reaching a three-month high. This increase came after the Federal Reserve lifted an asset cap that had been imposed on the bank due to regulators’ concerns about the exploitation of its customers. However, the stock’s performance throughout the day was mixed, with a slight decline of 0.3% by the closing bell. Some Wall Street analysts believe that the bank’s growth ambitions may already be factored into its current valuation.

In recent years, Wells Fargo has faced a series of scandals, including the creation of millions of fake accounts without customer consent. In response to these issues, US regulators imposed a $1.95 trillion asset cap in 2018, freezing the bank’s balance sheet at 2017 levels. This restriction limited Wells Fargo’s ability to compete with other major banks in the industry, resulting in an estimated $39 billion loss in profits.

With the asset cap now lifted, Wells Fargo is free to pursue growth opportunities that have been in the works for years under CEO Charlie Scharf. Scharf has made strategic moves to reposition the bank, including selling off various divisions such as asset management, corporate trust, student loans, and commercial mortgage servicing. In place of these divested businesses, Wells Fargo is focusing on expanding its trading and investment banking operations, which were previously constrained by the cap.

The bank has made significant additions to its senior banking team and recruited top talent from competitors like JPMorgan. These efforts have already shown promising results, with significant growth in investment banking fees, advisory fees, and trading revenues. Despite these positive developments, some investors remain cautious about Wells Fargo’s future performance. Market analysts have noted that the removal of the asset cap may already be priced into the stock’s value, limiting potential upside in the near term.

Overall, Wells Fargo’s shares have outperformed the broader market in 2025, but the bank still faces challenges in regaining momentum lost during the penalty period. Analysts have varied opinions on the stock’s future trajectory, with price targets ranging from $73.50 to $90 per share. As Wells Fargo continues to strengthen its investment banking capabilities, investors will be closely watching for signs of sustained growth in the coming months.

This article was originally published on The Daily Upside. For more insightful analysis and perspectives on finance, economics, and markets, subscribe to The Daily Upside newsletter.