Why I’m Bullish on Charles Schwab
Charles Schwab (SCHW) made headlines twice in the past two months with two bold moves that are changing the landscape of the brokerage business and positioning it to dominate the money management industry for years to come.
The first bold move came in early October when Schwab effectively dropped commission rates on all trades to zero. Initially, shares of Schwab dropped some 15% on the news. But they recouped those losses within the month as investors came to appreciate that not only did the move allow SCHW to compete more effectively with a new platform such as Robinhood and SoFi which offer free trading, but the reality is trading commissions only accounts for 10% of SCHW’s revenue — even less of its profits.
Competitors such as TD Ameritrade (AMTD) and E*Trade (ETFC), which quickly matched the zero commission offer, were hit even harder as their shares fell over 25% and had only regained about half of that in the following weeks.
The second bombshell … Continue reading at StockNews.com
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