Capital One, Discover Financial In Focus After DOJ Reportedly Greenlights $35B Merger, Retail’s Bullish

Capital One (COF) and Discover Financial Services (DFS) drew retail chatter on Thursday after the Department of Justice reportedly told financial regulators in a confidential memo that it didn’t have sufficient evidence to block the $35 billion merger between the credit card firms.

According to a Bloomberg report citing people familiar with the matter, the DOJ memo to the Federal Reserve and Office of the Comptroller of the Currency would allow the financial regulators to approve the deal.

The report added that the memo indicates a change of direction after DOJ antitrust officials had outlined some concerns that the deal could harm competition in an earlier version of the document during the Biden administration.

The earlier memo included concerns about the potential loss of head-to-head competition for first-time credit card holders and the potential for Capital One to use Discover to evade regulatory caps on interchange fees for its debit card business, Bloomberg reported.

The two companies' shareholders had voted in favor of the deal in February.

On Thursday, Capital One and Discover Financial shares slumped 10% and 8.3%, respectively, amid a broader market selloff triggered by President Donald Trump’s tariffs.

Retail sentiment about Capital One on Stocktwits moved higher into the ‘bullish’ (74/100) territory than a day ago, while retail chatter jumped to ‘extremely high.’

Retail sentiment about Discover Financial remained in the ‘extremely bullish’ (75/100) territory, while retail chatter was ‘extremely high.’

One retail trader said Capital One stock would have been in the $190 to $200 range had Trump not unveiled tariffs.

Capital One shares have fallen 8.9% year-to-date, while Discover is down 7.8%.

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