E*TRADE saw a double-digit increase in daily average revenue trades in January as the stock market hit record highs. In a press release, the New York-based online brokerage reported that daily average revenue trades, or DARTs, were 315,572 in January, up 29% from December and up 57% year over year.
E*TRADE Financial Corporation (ETFC) was also able to add 64,581 gross new brokerage accounts during January and ended the month with 3.7 million brokerage accounts, an increase of 25,529 from December alone. During the month of January, stocks were setting new highs, with the Dow Jones Industrial Average hitting levels never seen in its history. Since then, a steep sell-off has set in, with stocks back to where they were at the end of last year if not lower.
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According to E*TRADE, it had net new brokerage assets of $1.5 billion for January. The online brokerage said that customer security holdings increased by $17.4 billion during the month. Meanwhile, brokerage-related cash jumped $0.1 billion to $53 billion. Margin balances also increased during January, ending the month at $9.4 billion. Not surprisingly, customers were net buyers of about $1.5 billion in stocks during the first month of the year.
E*TRADE and the other online brokerages had a strong 2017 thanks to the bull run in the stock markets that lasted nine years without any volatility. With retail investors getting into the market toward the end of last year, the discount brokerages started 2018 off in a strong position. How they will fare as volatility comes back into the market with a vengeance remains to be seen, since most are still reporting their trading activities from the month earlier.
In conjunction with reporting its fourth quarter results in late January, E*TRADE announced that it is expanding its number of retail brokerage accounts by purchasing more than one million accounts from Capital One Financial Corporation (COF). According to E*TRADE, which is paying $170 million for the portfolio of brokerage accounts, the accounts have $18 billion in assets. As of the end of last year, $1.9 billion of these assets were in cash, with $0.2 billion in customer margin balances.
E*TRADE said that the deal will be "relatively" neutral to earnings this year and accretive by roughly $0.06 per share in 2019. The New York-based discount brokerage is funding the purchase with cash on hand. For its fourth quarter, the company weighed in with EPS and revenue that beat Wall Street views. For the last quarter of 2017, it reported net income of $129 million, or $0.48 per share. Excluding items, adjusted EPS came in at $0.64 per share. Analysts were looking for adjusted EPS of $0.61 per share. Revenue was $637 million, higher than the year-ago period.