Charles Schwab CEO Bought $3 Million In Company’s Stock Amid Rout

Topline

Charles Schwab’s CEO Walter Bettinger bought 50,000 shares of his financial services firm’s stock at Tuesday’s market open, Bettinger told CNBC, the latest high-profile stock purchase among finance executives as numerous bank stocks crashed after the failure of Silicon Valley Bank and Signature Bank set off alarms on Wall Street.

Key Facts

Bettinger’s roughly $2.8 million stock purchase was a vote of “confidence” in his company after its shares dropped more than 30% in the prior three trading sessions, he said on CNBC’s The Exchange.

The share buyup preceded Schwab shares’ 9% Tuesday rally, the biggest daily gain of any company listed on the S&P 500.

Schwab has experienced “significant…asset inflows” in recent days, Bettinger added, assuaging some fears brought on by Schwab’s monthly update published Monday revealing client assets at the firm dipped 4% from January to February, while the average margin balances fell 28% last month.

In a Tuesday note to clients, Deutsche Bank analyst Brian Bedell said concerns about Schwab’s financial health were overblown, but “the cost of bearing greater liquidity” will significantly weigh on 2023 earnings, slashing his price target for the stock by 24% but maintaining his buy rating.

Big Number

24%. That’s how much Schwab stock is down over the last week despite Tuesday’s rebound, far outpacing the Dow Jones Industrial Average’s 3% decline during the time frame.

Key Background

Billionaire investor Ron Baron told CNBC earlier Tuesday he bought Schwab shares during Monday’s dip. Schwab’s stock slump came amid a broader decline in bank stocks as investors scoured balance sheets after last week’s regional bank failures. Federal regulators announced Sunday it would step in to guarantee all customer deposits at the two failed banks. That quasi-bailout ensured the safety of depositors but left equity investors Silicon Valley Bank and Signature Bank out of luck as the respective stocks became essentially worthless.

Further Reading

Banking Chiefs Are Aggressively Buying Their Own Stocks In The Wake Of Silicon Valley Bank’s Collapse (Forbes)

‘Head Fake Rally’? Dow Jumps 400 Points On Bank Stocks’ $37 Billion Recovery (Forbes)

Bank Stock Crash Intensifies: Losses Top $185 Billion As Analyst Warns SVB Failure Risks Intense Regulator Scrutiny (Forbes)