We Called It: Citi May Give E*Trade a Boost
Senior Reporter Dan Freed on Sept. 4 speculated that heavy trading volumes on beaten-up financial stocks like Citigroup would likely benefit online brokerage stocks like E*Trade and Charles Schwab. On Tuesday, both reported a rise in August trading volume. Below is a reprint of Freed's Sept. 4 story:
NEW YORK (
) --
Citigroup
(C) - Get Report
stock's huge trading volumes may give a much needed shot in the arm to
E*Trade
(ETFC) - Get Report
and other online brokers.
The big surge in shares of beaten-down financial names has lifted revenues at electronic trading platform
Direct Edge
,
The Wall Street Journal
reported Thursday. In an interview with the newspaper, Direct Edge CEO William O'Brien specifically mentioned Citigroup, along with
Fannie Mae
(FNM)
and
CIT Group
(CIT) - Get Report
.
O'Brien went on to say the trend "doesn't necessarily" favor his platform over rivals like
NYSE Euronext
(NYX)
and
Nasdaq OMX Group
. Translation: Everybody wins, and all those companies should get a revenue boost.
But what about online brokers? There's no reason the trend shouldn't benefit them as well. Look for a nice surprise at
Charles Schwab
(SCHW) - Get Report
,
TD Ameritrade
(AMTD) - Get Report
,
TradeStation Group
(TRAD)
,
Options Express
(OXPS)
and
Raymond James
(RJF) - Get Report
.
Of course, these trades in zombie stocks, which, ironically enough, include E*Trade itself, aren't going to radically change the earnings profile for any of the online brokers, but it's worth taking into account when sizing up their earnings potential for the quarter.
--
Written by Dan Freed in New York
.
