Data: FactSet; Chart: Axios Visuals
After seeing its stock price plunge 26% in Tuesday trading, brokerage firm TD Ameritrade announced it would offer free stock, ETF and options trades, starting Thursday.
Threat level: Investors are worried that the race to the bottom, now clearly in full swing, will blow a hole in the profitability of online brokerage companies. Shares of the companies already were struggling this year.
- Charles Schwab — the largest of the publicly traded brokers with 12 million customers — made the same offer to clients earlier in the day, sparking a massive selloff among the top brokerage firms.
- Interactive Brokers cut fees to zero on stocks and ETFs last week.
By the numbers:
- Schwab's stock fell 9% on the day.
- E-Trade's stock dropped 16%.
- Interactive Brokers' stock lost 9%.
Of note: TD Ameritrade makes a particularly large (25%) share of its revenue from commission fees, according to analysts at investment bank JMP Securities.
