COF BearishI Just got into some cof 180 puts. I think the option market is signaling a push down to the $180 area so im going to jump on the band wagon. Looking to get out there or lower.
COF
COF - Capital One Drop and Pop LONGCOF is shown on 1 15 minute chart. The trade idea is to play the drop in a bank stock as a
reaction to the sticky inflation report and the idea that a rate cut already baked into stock
price is about to come off the table. This is a risky reversal trade. However, with risk comes
reward. The idea is on the chart. I will take a long trade here anticipating a return of 2%
and about seven times risk. A call option for an expiration of 4/19 will also be in the position,
striking 141. See also
Capital One to Buy Discover for $35 BillionThe country’s ninth-largest bank, Capital One (NYSE: COF), shocked the finance world when it announced that it will buy Discover Financial Services (NYSE: DFS) for a staggering $35 billion. This all-stock deal is set to be one of the biggest M&A deals of 2024, bringing together two of the nation’s credit card giants to create a true global payments powerhouse.
But, what drove Capital One to make this move? It’s clear as day that the Berkshire Hathaway-backed (NYSE: BRK.B) Capital One has finally had enough of the sky-high fees associated with Visa (NYSE: V) and Mastercard (NYSE: MA).
By snatching up Discover, Capital One won’t just compete with these industry titans, but it could break free from their clutches altogether. After the news, DFS stock rose 15.6% in premarket trading, while COF stock fell by 3.5%. But there’s just one problem: The rise in DFS stock doesn’t reflect the nearly 27% premium Capital One valued Discover at, which could suggest that investors aren’t entirely convinced that this deal will come to fruition.
The Deal
Under the terms of the all-stock deal, if you’re a Discover shareholder, you’ll receive 1.0192 shares of COF stock for each DFS stock you own. And what’s really interesting about this is that Discover has a market cap of $27.6 billion, and the deal is valued at $35 billion, which means it’s a 26.6% premium over its closing price on the 16th of February. Moreover, after the deal closes, Capital One shareholders will hold roughly 60% of the combined company, while Discover shareholders will own the remaining 40%.
What is Capital One Getting?
For starters, now is a good time for credit card companies to make big moves like this one. There’s a boom in the credit card sector because more and more customers are switching from paying with cash to cards. This is largely thanks to generous rewards programs and the strong rise in e-commerce, which started to take off during the pandemic. Additionally, card issuers are getting a boost from increasing credit card debt, which continued to increase last year amid rising prices and declining savings.
As for what it’s getting from the deal, buying Discover would give Capital One a large card network, greatly increasing its power in the payments ecosystem. And this is important because card networks are essential for making transactions happen, as well as setting the fees that sellers pay when customers shop with their credit cards.
This would allow Capital One to negotiate interchange fees and other terms directly with merchants, making Capital One more of a competitor to companies like Visa and Mastercard. Notably, shares of Visa were down 1.8% in premarket trading after the news, while Mastercard stock was down 3.2%.
The deal would also increase the number of cardholders Capital One counts as customers for its credit-card lending business. This deal doesn’t just give Capital One numbers, but quality too, since many Discover cardholders have high credit scores. The deal would also allow Capital One to get its hands on the consumer deposits in Discover’s savings accounts, an area where it already has a large presence but would like to continue growing.
When you compare Discover to competitors like Visa and Mastercard, you’d think that Discover is a very small company, but what makes it unique is that it’s one of the few U.S. card issuers that actually have payment networks. Which is the main reason why Capital One is buying it in the first place. Even though it uses Visa and Mastercard for most of the cards it issues, it will likely begin switching some of its cards to Discover after the deal closes.
Even after the deal closes, Capital One will continue using Visa and Mastercard thanks to its wider reach. For example, Discover currently has 70 million merchant acceptance, compared to Visa’s 130 million and Mastercard’s nearly 100 million.
Still, this could be a play from Capital One to reduce its dependence on Visa and Mastercard, as the pair have come under fire recently for their high fees they charge for processing payments. Some lawmakers have even accused them of forming a “duopoly”.
Discover’s Recent Troubles
For Discover, the deal couldn’t have come at a better time. The company was going through a tumultuous period with increased regulatory scrutiny and two changes in its leadership.
Discover’s troubles are a result of a statement issued last year, in which it stated that it had misclassified certain credit card accounts beginning in 2007 and had incorrectly placed them in the highest pricing tier. As a result, the company was forced to record a liability of $365 million in estimated compensation for everyone involved.
In addition to that, Discover received a consent order from the FDIC regarding consumer compliance, but Discover did not release many details about the matter. Discover escaped a fine from regulators after reaching an agreement with the FDIC to improve its compliance management system.
A Decade of Offers
Interestingly, this is not the first time Discover was approached by a large bank or even a tech company for an acquisition. In fact, the company has been receiving offers for the last decade, especially from tech companies. The reason Discover accepted this deal and not those from tech companies is likely because they were only interested in its payments and card network. For tech companies, Discover offered an opportunity to play a more central role in payments. But, Discover’s older management wasn’t interested in separating the company’s credit card lending side from the network, which is why many deals were rejected.
On the other hand, Capital One said that it’s planning to keep the Discover brand on the cards and network. If the deal happens, it will certainly rank among the biggest deals so far for 2024. After a slowdown in M&A activity in 2023 due to increased interest rates that reduced the appetite for massive deals, this deal between Capital One and Discover could reignite interest in this market.
The Combined Company
There’s an opportunity here to create a new credit card giant, but the main concern for shareholders of COF stock and DFS stock can be summed up in one question: Will the resulting company outperform the broader market in the long-term?
Over the past 10 years, COF stock has underperformed SPY with an annualized return of 8.39%, while SPY has yielded a comparatively higher 12.62% annualized return. Compared to the XLF, COF stock has also underpeformed offering an annualized return of 8.39% over the last 10 years, while XLF has yielded 13.08% annualized return.
The same can be said for DFS stock which underperformed the XLF during this same period and compared to the SPY, achieved an annualized return of only 9.97% compared to the SPY’s 12.62% annualized return.
It’s possible that these two companies hope that combined, they will be able to outperform these benchmarks and take on industry giants. With this merger, the resulting company would create the largest card issuer in the US – immediately surpassing JPMorgan Chase.
While Jamie Dimon brushed it off saying “let them compete. Let them try”, the merging companies are likely hoping to capitalize on the credit card sector boom and use their advantages and synergies to generate higher profits and shareholder value than COF stock or DFS stock could achieve on their own.
COF Stock Forecast
If the deal is approved by regulators, the COF stock forecast looks notably bullish. In fact, Citi analysts stated that with Discover’s valuable payments network it will unlock value that neither company could achieve on its own. As a result, Citi increased its price target for COF stock to $152, offering 11% upside from its closing price on the 16th of February.
However, one glaring risk is the fact that M&As of large companies are super hard to pull off. Together, Capital One and Discover will become the sixth-largest bank in the US, with consolidated assets of almost $625 billion. A combination like this will undoubtedly come under intense antitrust scrutiny.
The deal is already seeing push back from Senator Warren and 12 congressional Democrats who wrote Acting Comptroller Michael Hsu and the Michael Barr, urging them to block the deal. This appeal is based on their belief that the deal would reduce competition and reduce card issuers’ incentives to offer customers favorable terms.
However, its possible that regulators will be more amenable to this deal, since Capital One is a well known company and considered to be a “good actor”. Not to mention, Discover previously pledged to invest $500 million to better its compliance operations after its troubles with the FDIC.
Setting aside these regulatory concerns, the two companies expect the deal to close late this year or in early 2025. There is a lot at stake for Capital One which stated that shifting away from Visa and Mastercard’s “duopoly” would help it generate an extra $1.2 billion in revenue in 2027.
While COF stock offers a tempting opportunity for long-term investors, veteran investors have seen time and again major deals fall through. Whether it was the collapse of Adobe’s acquisition of Figma or the UK’s decision to block Microsoft’s $69 billion acquisition of Activision Blizzard, its not unusual for these deals to fall through or at the very least face hurdles such as in Microsoft’s case.
COF Stock Rallies On Capital One EarningsCOF stock rallied Friday after financial services giant Capital One (COF) reported an upturn in earnings, topping Q3 estimates by a broad margin.
Capital One Q3 earnings rose 6% to $4.45 per share early Friday after six quarters of double-digit declines. Revenue increased 6% to $9.34 billion.
Analysts polled by FactSet expected earnings of $3.24 per share on $9.2 billion in revenue.
Net interest income climbed 6% to $7.42 billion.
Credit card loans increased 3% to $146.8 billion while consumer banking loans fell 1% to $76.8 billion. Auto loans decreased 1% to $75.5 billion. Commercial banking loans declined less than 1% to $91.2 billion.
Technical Analysis
COF is trading in the middle of its 52-week range and below its 200-day simple moving average.
Investors are still evaluating the share price, but the stock still appears to have some downward momentum, which will definitely reach support level and bounced back.
Capital One....technical Breakdown loomingWith major weakness in the banking sector we are still seeing the contagion play out. Some banks are more at risk than others.
Based off of a blow out in Credit Default Swaps. The bond market is showing there is tremendous risk in this bank.
Just like Credit Suisse CD's blew out befroe the collapse, we are watching COF credit defaults blowout.
💾 Capital One Financial Corporation | Financial DetoxI started a series with the TOP10 largest bank in the USA.
I went all the way through 8 and stopped... Let us finish now.
Capital One (COF) is the 9th largest bank in the USA, the chart is also bearish and has been bearish since August 2021.
This banking corporation as well as others have been going down for more than a year and the final phase of the bear market is about to take place.
The type of correction we are witnessing is a Zig-Zag, 5-3-5.
We have the initial 5-down mapped out, then the WXY correction and a new 5-down wave pattern starting to develop.
This is Elliot Wave theory that I now mix together with my classic signals.
The 0.618 Fib. retracement support level for the inflationary, money printing, bull-market of 2020-2021 has been broken. The current price trades below this level and closing below it confirms lower prices.
Likely to close below based on all the bearish signals coming from this chart.
✔️ We have an established downtrend.
✔️ There is a bearish cross on the MACD (chart below).
✔️ The RSI trending lower.
MACD:
As I mentioned in my latest Bitcoin article, we still have some turbulence to go through in 2023.
2024 Everything should start to get better.
All the weak banks will be flushed out and a new cycle will start. Just as we saw with Crypto where the gambling/weak companies were removed, the bear market works the same all across.
Let's call it a "financial detox" once more.
Namaste.
COF.ASX_Bearish Pullback Trade_ShortENTRY: 1.58
SL: 1.65
TP: 1.375
- ADX>25
- Daily RS -ve
- Daily FFI -ve
- Weekly RS -ve
- Weekly FFI -ve
- Moving averages are aligned.
- Stoch RSI dipping down.
- First breakdown on 2 Aug 2022
- Second breakdown on 7 Sep 2022 with retracement to near 10EMA and support-turn-resistance area (1.625).
- Entry based on today >3% rebound off 10EMA but would like volume to be higher.
Play Catch with Capital One's Falling Wedge!Play Catch with Capital One NYSE:COF 's Falling Wedge!
You don't have to be athletic to play catch with Capital One's falling wedge pattern!
Pattern Identified- Falling Wedge pattern on the weekly and daily chart.
Play ball!
Sweet Peace,
MrALtrades00, Technical Analyst & Options Practitioner
capital one financial corporation ( COF )ascending triangle detected on COF
PE ratio : 6
great fundamentals and technical indicators
COF - Trade PlanMy Trading Bias for CSL is Bullish because after forming a High High, it has confirmed that it is in an uptrend. The recent pullback at Fib Retracement level of 78.6% has been good support, and Bullish price Action with a break of the Bearish Trendline coupled with High Volume indicates that COF should continue to the upside.
TP1 - $2.150
TP2 - $2.230
Stoploss - $1.870
Please note these are my own notes, by no means trading advice. Please do your own research before entering into any trade.
Capital One (COF) Bullish ContinuationLast week, Capital One restored their quarterly dividend to pre-COVID19 price levels. The company announced a quarterly cash dividend of 40 cents per share, up over 300% from the prior quarter. The dividend will be paid out on March 1st to shareholders of record as on February 17.
The development excited investors enough and pushed Capital One shares to a new 52-week high of $115.50 at the beginning of the NY trading session on Feb 5.
With that said, further upside is expected. Daily timeframe shows a nice bullish gap to the upside refueling bullish optimum.
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"Always prepare yourself for the unexpected turn."
Paul Forbes - Managing Partner @ LEFTURN Inc.
Capital One -- Not in My WalletAlthough Capital One is involved with more than consumer credit cards, it doesn't feel like a great place to be with record unemployment -- while unpopular, I am taking the gamble that the longer term trend is closer to '08 style credit crisis. The indicators line up, as well as the exact price levels. If this sells off (starting with poor earnings next week?) and was to do an exact length match to the bottom as in '08, it would be 17 monthly candles, or in this case roughly December 2021. COF broke through its 200 day moving average, and I don't see the earnings impressing.
COF - GREAT Buy Opportunity, IF ... !!!Hello! Friends,
-This would be a great Buy Opportunity, IF NYSE:COF breaks up the Resistance at $62.42 !!
- NYSE:COF is following PITCHFORK levels well. You can even trade only with its support and resistance .
$COF: Breakout and pullback is complete, Breakout and pullback is complete, ready to bounce, Target $77-80
COF - DAILY CHARTHi, today we are going to talk about Capital One and its current landscape.
As nowadays we live in a consumerist society and access to a credit card has continually become easier to obtain, is reasonable to predict that the card debts are also going to rise too, as financial education isn't the strong point of U.S consumers, and are used to the debt culture.
The heat up U.S economy put credit card companies in a more comfortable zone as the unemployment rate remains near to historic lows, which helps customers to keep up with their bills. However, the question that worth to be raised here is, if the 90 days past due card debt is probably surging to 2.01%, the highest level since 2010 amid a heated economy, what is going to happen with this type of debt, once the U.S economy make its first downward movement of correction and make harder for customers pay their credit card bills. Even with the credit card issuers tighten their credit standards, we can't be sure it's going to be enough to avoid a crisis on the sector, which could lead to a flood of bad debt, decline of new credit card issuance and other types of liabilities. This scenario could mean concerning news for Capital One if the company doesn't progressively start to deploy the proper countermeasures for this scenario.
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$COF Downtrend Breakout and Retest$COF Capital One appears to have broken through resistance. Possible medium term targets on chart.
COF: going long again.Was stopped out after previous post at 92.1. Now getting support at just about the level I have labeled "1" at 88.24. Some increase in volume last few days with a potential bullish diverge in the daily RSI. Going long again with my personal stop a close<88.24 My target highlighted. Process your way.
COF - Double top formation Short from $87.93 to $76.23COF forming a massive double top formation. It touched the double top resistance & seems rolling over to the down side. Overall looks a decent shorting opportunity.
Trade Criteria
Entry Target Criteria- Break of $87.93 or rally to $91.55
Exit Target Criteria- $76.23
Stop Loss Criteria- $92.13
Option: $90 March/Apr-17 Puts
You can check detailed analysis on COF in the trading room/ Executive summary link here-
www.youtube.com
Time Span- 12:50"
Trade Status: Pending
ABOUT CAPITAL ONE COFWell those who missed to short Citi, hsbc, scb, ms, wfc, boam bcs here is a new opportunity to maximize profit by shorting CapitalOne Bank COF . It is still in free fall zone. For low we can look for 2009 low price.
Capital One COF - Short - Another failure to break 200 DMARSI says oversold but everything else says it has further downside to come. Might not last long but for now I am short.
14th Candle cleared it of is vital MAs and it's probably got more room to slip. To the upside it could test 68 again and bring RSI up to 50 again before the trend continues. We will see if it gets rejected from here on Monday
