These guys have been running off customer's for a year with their truely stupid "Dooms Day Scenario" Margin Machine. As I posted before, and Mr. Petterfy responded, they are the worst for customer service and they have taken their Programmers and their Risk People and let them destroy the business.
I took my money out of IB and moved it and have been very happy. They lost my 200k worth of commissions a year. Two of my friends did the same. One is a CTA with over $40 million under management. I was told that big hedge funds are doing the same.
Just in the past week they extended the "Dooms Day" margin to the 10 yr. options (ZN) as they did previously to ES, ER2 & YM.
You can't make money when you keep running off the business. It will only get worse.
Besides the industry's worst customer service, besides the margin issues, besides not being able to get an empowered human to help you with a problem, besides making only $18 million on almost $400 million in revenue -- what else can you say -- this business is terrible....
My biggest complaint? IB margins out its customers during overnight hours when there is very thin liquidity -- and the worst? -- they take the other side of the trade! I think that should be illegal. They know about the trade in advance. They issue the margin call and then they come into the market with an outrageous ASK price on the other side and take out the client. It is a horrible practice and the SEC should outlaw it -- The CME & CBOT are aware of it and they should not allow it either... But IB keeps doing it... What a horrible practice. Even IF it is legal -- anyone who makes money that way should get what they deserve...
"How much longer can the company survive? For another 11 years? CEO is selling ...., since IPO, where does the price go? go figure .....
You are holding the bag .... "
Well, considering the CEO has been in business since 1977, I doubt he (or IB) is going anywhere, but to greater fortunes.
It will help the liquidity for the CEO to sell some of his 75% stake. That is far too high for any single person to own. The stipulation in the IPO agreement is not to divest of the whole stake, it is entirely discretionary. I doubt the CEO will sell all of his stake, probably stabilizing at somewhere around 30-40%, like Warren Buffet or Bill Gates.
Indeed, the annual average over the last 5 years has been about 1/2 cent/share/day in earnings. Equity has gone from a little over 1 billion to about 5 billion today. With this kind of growth rate, stability, and margins, IB should model something like Google. 26% annual compound growth is clearly above average and so it certainly deserves more than a 11x multiple, which is what it trades at today.
I have been a very satisfied customer with IB for many years.
Since 1967 I have held positions as Securities Broker for most of the dominant US Securities Firms. Further, I had my own Pool Operator, CTA, and Introducing Broker Business with Refco. Periodically, I have served as an NFA Arbitrator in financial disputes and had consultations with the CFTC.
The above is stated, because it implies I have some experience. For selfish and other reasons, I hope IB will stay in Business with their attractive fees and trading platform. Anybody complaining about high margins in the current environment is misguided and will get their socks knocked of. Probably sooner, than later!
I am disturbed by the power of incompetent analysts to affect stock prices. The good news is that it is a temporary non-event, over time the market will weigh the evidence, in IB's case, that we are earning a solid $1 billion+ per year with fat margins and minimal risk, and cause IB to trade at its intrinsic value. Until then, I consider this a mouth-watering opportunity.
The report is incorrect, which is why it is amusing to see you actually believe it (without any critical analysis) and come to the wrong conclusion. I wonder what else you are WRONG about IB if you are the kind of person who believes everything they read without analyzing it properly.
Yeah... I was posting what AP reported...
Interactive Brokers 2Q profit rises 58 percent
Friday July 25, 10:34 am ET
Interactive Brokers 2nd-quarter earnings rise to $18.3M, but fall short of estimates
GREENWICH, Conn. (AP) -- Electronic market maker and broker Interactive Brokers Group Inc. said Friday its second-quarter earnings rose 58 percent due to an increase in trading gains, but it fell short of analysts' expectations.
Net income for the quarter rose to $18.3 million, or 44 cents per share, from $11.6 million, or 28 cents per share, during the same quarter last year. The company went public during the second quarter last year.
Analysts polled by Thomson Financial, on average, forecast earnings of 50 cents per share for the quarter on revenue of $430.8 million.
Net revenue increased to $395.4 million during the quarter, from $294.7 million during the year-ago period.