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Raymond James Financial Inc RJF

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SPACs Are at Worst Neutral to Investment Banking Revenue and Could Be Meaningfully Positive

Michael Wong, CFA, CPA Sector Director

Analyst Note

| Michael Wong, CFA, CPA |

We believe that special-purpose acquisition companies, or SPACs, are a net positive to industrywide investment banking revenue. We estimate that the three SPAC-related investment banking fees—initial SPAC underwriting, private investment in public equity placement fees, and acquisition advisory fees—for a relatively large SPAC worth $1 billion can be as much as 50% higher than the traditional IPO underwriting fee for bringing a private company public. For an average SPAC of around $300 million, we estimate investment banks will earn about as much SPAC-related revenue as they would from a traditional initial public offering process. In aggregate, we estimate that there's $17 billion-$20 billion of investment banking revenue related to the $200 billion of SPAC capital raised over the previous two years.

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Company Profile

Business Description

Raymond James Financial is a financial holding company whose major operations include wealth management, investment banking, asset management, and commercial banking. The company has more than 14,000 employees and supports more than 4,000 independent contractor financial advisors across the United States, Canada, and the United Kingdom. Approximately 90% of the company's revenue is from the U.S. and 70% is from the company's wealth management segment.

880 Carillon Parkway
Saint Petersburg, FL, 33716
T +1 727 567-1000
Sector Financial Services
Industry Capital Markets
Most Recent Earnings Jun 30, 2021
Fiscal Year End Sep 30, 2021
Stock Type Cyclical
Employees 14,800