Charles Schwab trading volume plunges as retail trading frenzy cools

Daily trading volume averaged 6M, a 28% drop from the prior quarter

Charles Schwab Corp.’s profit slipped in the three months through June as the retail trading frenzy that was born amid the pandemic cooled. 

Daily trading volume averaged 6 million, a 28% drop from the record 8.4 million daily average recorded in the first quarter. Average daily trading volume was up 4% year over year. 

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As trading volumes slowed so too did the number of new brokerage accounts. Customers opened 1.7 million new accounts, down from 3.4 million the prior quarter. 

Still, it was the third straight quarter where at least 1 million new accounts were opened, excluding the merger with TD Ameritrade. 

"During the second quarter, signs of normalcy took root across the U.S. as vaccinations accelerated, social activities largely resumed, and people started returning to corporate offices," said CEO Walt Bettinger. 

"At the same time, equity markets continued their ascent, with both the S&P 500 and NASDAQ achieving record highs during the quarter, while longer-term interest rates fluctuated as investors digested economic recovery data and recent Federal Reserve commentary," he added. "Against this evolving backdrop, we continued to support highly engaged investors even as activity levels moderated from the first quarter surge."

Trading revenue fell 21% from the prior quarter to $955 million. That contributed to net revenue declining 4% quarter over quarter to $4.53 billion. Wall Street analysts surveyed by Refinitiv were expecting net revenue of $4.46 billion. Total revenue was up 85% year over year.  

Net profit, meanwhile, rose to $1.27 billion, or an adjusted 70 cents per share, a penny below the consensus estimate. Schwab earned an adjusted 84 cents a share last quarter and 54 cents a year ago. 

Total client assets reached a record $7.57 trillion as core net new assets totaled a second-quarter record of $108.8 billion. 

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Online brokers have seen an influx of new customers since the early days of the pandemic as many followed Robinhood into the world of free stock trading in the months before lockdowns aimed at slowing the spread of COVID-19 allowed Americans to focus more on their investments. 

Americans' renewed love of do-it-yourself investing has been a boon for Charles Schwab’s stock. Shares were up 33% this year through Thursday compared with the S&P 500’s 16% gain.