Schwab Shares Tumble as Profit Misses Estimates on Trading Slump

(Bloomberg) — Charles Schwab Corp. fell the most in more than two years after first-quarter profit and revenue missed analysts’ estimates.

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For the three months ended in March, adjusted earnings per share came in at 77 cents, the Westlake, Texas-based company said in a statement Monday. That fell short of the 84-cent estimate of analysts surveyed by Bloomberg.

Customers placed 6.58 million daily average trades in the first quarter, a decline of 22% from the year-ago period, which included a surge in trading activity across the industry, amid the investor rush into meme stocks. Net revenue of $4.7 billion also came in slightly below consensus estimates of $4.8 billion.

Schwab slid 9.4% to $74.99 at 10:52 a.m. in New York, extending this year’s decline to 11%.

Retail trading has surged in recent years after brokers including Schwab cut commissions to zero and market swings during the pandemic created hordes of new at-home investors. But the most frenzied activity has abated: about 17% of U.S. equity trading volume came from retail investors by early March, down from a peak of 24% in the first quarter of 2021, according to estimates from Bloomberg Intelligence analysts Jackson Gutenplan and Larry Tabb.

Clients faced “a complex set of crosscurrents” including rising inflation, geopolitical turmoil, increased volatility and Federal Reserve tightening, said Schwab’s Chief Executive Officer Walt Bettinger in the statement.

(Updates with share drop in the first paragraph.)