Charles Schwab Says Retail Investing Boom Powered by More Than SpaceX IPO Trading Bump

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SpaceX got credit for breaking a lot of records in its market debut last month, including completing the largest-ever public offering and minting the first-ever trillionaire CEO. But while the IPO was one of the busiest trading days in Charles Schwab’s 55-year history, the investing giant is not letting Elon Musk’s rocket company steal all the thunder of its second-quarter earnings beat. 

On Tuesday, Schwab posted earnings per share of $1.62 for its second quarter, a jump from $1.14 at the same time last year and above the $1.56 Wall Street was expecting. Revenue hit a record $7.1 billion, also above the $6.9 billion analysts estimated. Customers opened 1.4 million new brokerage accounts in the quarter, and daily average trades hit a record 11.9 million.  

While Schwab CEO Rick Wurster conceded that SpaceX’s IPO fueled strong customer activity during the quarter, he said key factors in the firm’s profit and sales growth were expansion of its customer base and broadly heightened excitement about investing. 

“It’s a more structural trend of people more interested in investing than they’ve ever been,” Wurster told CNBC. 

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Retail Boom 

Retail investing interest has been surging for years, with the GameStop investing frenzy, soaring prices of stocks like Tesla during the onset of the pandemic and the most recent boom in AI stocks as just a few examples. That’s in part due to a market that keeps rising,  low barriers to entry (zero commissions are now the norm) and the fact that people are investing younger and staying invested, Wurster said. 

He also gave insight into how everyday investors are positioned nowadays: 

• Retail investors are buying the dip, with more buying on down days than up days, Wurster said. They’re bullish and wealthier, based on Schwab’s data on total client assets, plus they’re more interested in tax strategies.

• They also gravitate toward the part of the market with the most momentum, Gavin Filmore, CEO of white-label ETF platform Tidal Financial Group, told The Daily Upside. “We’ve even seen some of the fast-money crowd shift from crypto into AI as those opportunities have evolved.” 

Another Earnings Beat: Interactive Brokers reported earnings of 69 cents per share and net revenue of $1.90 billion for the quarter, also beating analysts’ expectations. Like Schwab, it’s welcoming newbies: The firm reported 34% year-over-year growth in customer accounts. Robinhood, the Reddit crowd’s favorite trading app, is set to report earnings next week.

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