Capital One Slips As Private Credit Jitters Spread

Capital One Financial Corp (NYSE:COF) shares are trading lower Monday afternoon as a wave of selling hit U.S. bank and asset-management shares on worries about private credit and AI-exposed lending.

Here’s what investors need to know.

• Capital One Financial stock is feeling bearish pressure. Why is COF stock dropping?

What’s Driving Monday’s Weakness?

Monday’s pressure followed news that Blue Owl Capital Inc (NYSE:OWL) will liquidate about $1.4 billion in loans to meet redemptions in a non-traded private credit fund, unsettling investors about funding strains and potential markdowns for lenders.

Although Capital One has very limited direct exposure to Blue Owl vehicles, the decision to sell a large portfolio at book value and accelerate cash back to investors underscores how quickly liquidity can vanish when sentiment turns.

It revives fears that non-bank lenders may be forced sellers if redemptions climb, hurting prices for the same middle-market and software borrowers that banks also finance.

COF Sell-Off Signals Systemic Risk

Capital One Financial, one of the largest U.S. credit-card issuers with a sizable online consumer bank and meaningful auto and small-business lending operations, is taking the brunt of the selling as investors reassess how its card-centric model holds up in a more stressed credit backdrop.

Because Capital One relies heavily on unsecured consumer revolving credit and interest income from higher-yielding card balances, the market worries that tighter funding conditions and any pickup in charge-offs could compress net interest margins and force the company to build loan-loss reserves more aggressively.

When a company like Capital One, which is more concentrated in consumer credit than diversified universal banks, gets marked down, systematic strategies and discretionary stock pickers often reinforce that move, treating the stock as a proxy for rising pressure on lower-FICO cardholders, slower loan growth and a potentially more volatile earnings path.

AI Concerns Pressure Lending Models

AI-related worries about key software borrowers add another headwind for bank earnings and credit quality. That backdrop makes Capital One's card-heavy, more cyclical earnings base particularly sensitive to any sign of systemic credit stress.

Capital One Technical Weakness Deepens

Currently, Capital One is trading 11.2% below its 20-day simple moving average (SMA) and 17.1% below its 50-day SMA, indicating a bearish trend.

Shares have decreased 3.87% over the past 12 months and are positioned closer to their 52-week lows than highs, suggesting ongoing weakness.

The RSI is at 38.16, indicating neutral momentum, while the MACD shows a value of -6.6560, below its signal line of -5.8726, reinforcing bearish pressure on the stock.

The combination of neutral RSI and bearish MACD suggests mixed momentum, reflecting the stock’s struggle in the current market environment.

• Key Resistance: $228
• Key Support: $192

COF Shares Fall Sharply on Monday

COF Price Action: Capital One Financial shares closed Monday down 8.84% at $190, according to Benzinga Pro data.

Image: Shutterstock