Morgan Stanley shares fell about 1.2% in premarket trading on Wednesday, even after the bank reported stronger-than-expected second-quarter earnings. The bank’s second-quarter profit topped Wall Street forecasts, helped by a sharp rise in investment banking and trading revenue.
Morgan Stanley Posted record quarterly revenue of $21.35 billion, higher than analysts’ expectations of $19.64 billion. The bank’s net profit was $5.58 billion, or $3.46 per share, compared with net profit of $3.54 billion, or $2.13 per share, a year earlier.
Morgan Stanley earnings beat expectations
Analysts had expected earnings of $2.94 per share, so Morgan Stanley easily beat expectations, according to Reuters citing data from London Stock Exchange Group (LSEG). Investment banking revenue jumped 58% to $2.44 billion as more companies went public and M&A activity increased. Global mergers and acquisitions (M&A) deal volume reached $2.8 trillion in the first six months of this year, the highest first-half total since LSEG began keeping records in 1980.
Morgan Stanley closed several major deals during the quarter that helped boost its investment banking business. The bank is one of the lead underwriters of the project Elon Musk’s SpaceX IPOReuters said this was a record market debut and a sign of recovery in the U.S. IPO market.
Morgan Stanley’s trading revenue surges
Morgan Stanley also helped manage Cerebras’ IPO in New York and Alphabet’s recent equity financing. The bank also advised Fertitta Entertainment on its $17.6 billion acquisition of Caesars Entertainment, Reuters reported. Trading revenue also hit a record high as investors took on more trades amid volatile market conditions.
Also read: SpaceX shares are down 33% from their peak, falling below the IPO price of $135: Here’s why
Morgan Stanley’s stock trading revenue increased 69% year-on-year to a record $6.3 billion. The bank said global market volatility, including the U.S.-Iran conflict that has pushed up oil prices, encouraged more client trading. High inflation and changing interest rate expectations are also creating uncertainty in the market, leading to increased trading activity.
Morgan Stanley wealth management business grows
Morgan Stanley Chief Financial Officer Sharon Yeshaya said most of the growth in trading volume came from Asian markets, including Hong Kong, India, Japan and South Korea. Morgan Stanley also achieved its long-term goal of managing $10 trillion in wealth management assets.
The bank added $148 billion in new client assets in the quarter, more than half of which came from employees of companies that went public through stock plans, Reuters reported, citing Chief Financial Officer Sharon Yeshaya. Yeshaya said Morgan Stanley expects the wealth management business to continue growing as the firm manages about 70% of the stock plans in the world’s 100 largest unicorn startups.
Why Morgan Stanley Stock Is Falling Today
According to Reuters, Morgan Stanley CEO Ted Peake said that Morgan Stanley is still looking for acquisitions that can help expand its business, but the bank will only seek transactions that meet very high standards. Other major U.S. banks including JPMorgan, Bank of America and Goldman Sachs also reported strong investment banking and trading results this week.
Despite strong earnings, Morgan Stanley stocks Still falling before the opening. One reason investors may be disappointed is that Morgan Stanley only repurchased $1.5 billion worth of its own stock during the quarter.
According to Reuters, citing KBW analyst Chris McGratty, KBW analyst Chris McGratty said that the $1.5 billion in share repurchases was lower than KBW’s forecast of $1.8 billion, making it the only major indicator that missed market expectations. Morgan Stanley shares are still up about 28.5% so far in 2026. However, the stock performed worse than Goldman Sachs but still outperformed the broader S&P 500.
