Bitcoin price today: gains to $120k, near record high on U.S. regulatory cheer
On Wednesday, Barclays (LON:BARC) reaffirmed its confidence in Charles Schwab Corporation (NYSE:SCHW), maintaining an Overweight rating and a price target of $84.00. According to Barclays, despite the recent decline in margin loans at Interactive Brokers (NASDAQ:IBKR), which could suggest a negative trend for competitors like Robinhood (NASDAQ:HOOD) and to a lesser extent Charles Schwab, the concerns may be overstated. Barclays highlighted that Charles Schwab’s customer base significantly differs from that of Interactive Brokers and Robinhood, which could mitigate the impact of declining margin loans on the company.
Interactive Brokers reported a 10%-12% drop in margin balances in April during their Q1 earnings call, stirring unease among investors about potential similar effects on Charles Schwab and Robinhood. However, Barclays noted that historically, Charles Schwab’s margin balances have shown a low correlation with those of Interactive Brokers. Meanwhile, Robinhood has exhibited a higher correlation, but margin lending represents a less significant source of interest income for both firms.
Barclays pointed out that trading activity and customer engagement at Interactive Brokers have remained robust into April. Similarly, Charles Schwab’s reported Daily Average Trades (DATs) indicate a strong uptick in trading activity for the month. This suggests that despite the downturn in margin lending, other areas of the brokerage business, such as trading volumes, continue to exhibit strength.
The analysis by Barclays suggests that while margin loan trends could be a concern for investors, the overall health of brokerage firms like Charles Schwab is not solely dependent on this one metric. The firm’s Overweight rating and price target for Charles Schwab remain unchanged, reflecting Barclays’ positive outlook on the company’s performance moving forward.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.