Capital One's Tariff Troubles: A Stock in Free Fall

Here's Why Capital One Stock Is Getting Crushed By

Published: April 3, 2025

Investors in Capital One Financial (NYSE: COF) are having a rough start to the year, with the stock down more than 15% in 2025 alone. The decline is largely due to concerns about the bank's exposure to the weakening housing market.

Capital One's mortgage business has been a significant contributor to its revenue in recent years. However, with the housing market showing signs of slowing down, investors are worried about the potential impact on the bank's earnings.

In its latest quarterly earnings report, Capital One reported a decline in mortgage originations, which is a key metric for the bank's mortgage business. The decline was attributed to a slowdown in the housing market, as well as increased competition from other lenders.

The decline in mortgage originations has significant implications for Capital One's earnings. The bank has historically relied on its mortgage business to drive a significant portion of its revenue. As the housing market slows down, Capital One's ability to generate revenue from this source is being put to the test.

In addition to concerns about the housing market, investors are also worried about the potential impact of rising interest rates on Capital One's business. The bank's mortgage business is particularly sensitive to changes in interest rates, as higher rates can make it more expensive for borrowers to take out mortgages.

The decline in Capital One's stock price reflects these concerns, as investors are pricing in a potential decline in earnings due to the weakening housing market and higher interest rates. While the bank's stock may continue to be volatile in the near term, investors who are willing to take a long-term view may find that the decline presents an attractive buying opportunity.

In the near term, investors will be closely watching Capital One's next earnings report for signs that the bank is able to navigate the challenging housing market and interest rate environment. The bank's ability to adapt to these changes will be critical in determining its future stock price performance.