OMG! Did you hear about First Republic Bank? Their stock value plunged below $1 billion for the FIRST time ever! This is CRAZY! Apparently, the US government is refusing to help them out with their rescue process, causing their stock to plummet even further! Can you believe it?
I mean, their market capitalization was around $886 million at its lowest on Wednesday, which is a significant decline from their peak of more than $40 billion in November 2021. I can’t even wrap my head around it. According to CNBC, the US government officials are NOT willing to participate in the First Republic rescue process, which is causing them to consider different alternatives, such as selling assets or creating a “bad bank” to deal with the problem assets.
But analysts are saying that there are several obstacles that could complicate the rescue efforts of the San Francisco-based lender. They’re trying to recover from a deposit outflow of over $100 billion in Q1! David Wagner, portfolio manager at Aptus Capital Advisors, said that the bank’s assets would be sold, but it might take some time, and they could be sold at a significant discount to par.
And get this, since the bank reported its Q1 earnings on Monday, at least three brokerages have reduced their price targets on First Republic’s shares! That’s insane! Art Hogan, Chief Market Strategist at B Riley Wealth in Boston, said that First Republic’s issues were likely idiosyncratic, and they would have a painful path in front of them.
The banking sector has been under renewed pressure following First Republic’s results, with the KBW Regional Banking index losing 4.4% so far this week! I can’t even imagine what’s going to happen next! Trading in First Republic’s shares was suspended multiple times, and the stock was last down almost 30% at $5.66.
