TLDR
- SCHW stock fell about 5% Thursday even though Q3 adjusted EPS of $1.69 beat the $1.65 estimate.
- Core net new assets hit a record $190.4 billion, up 38% from last year.
- Net interest revenue came in light, and guidance leans to the low end of the prior outlook.
- Sweep cash fell and buybacks were lighter than expected.
- A hot September CPI report added pressure on rate-sensitive financial stocks.
Charles Schwab (SCHW) stock fell about 5% on Thursday after the brokerage posted third-quarter results that beat on profit but fell short on key income measures. The stock was down 2% in premarket trading before the drop deepened in the morning.
The Charles Schwab Corporation, SCHW
Adjusted earnings per share came in at $1.69, ahead of the $1.65 analysts expected. A year ago, the figure was $1.31.
Revenue was about $7.2 billion, up from $6.13 billion a year earlier. Reports differ on the miss, with one citing a $7.18 billion forecast and another a $7.20 billion estimate against $7.17 billion reported.
Record Asset Gathering
Core net new assets hit a record $190.4 billion, up 38% from a year ago. That was well above the $160 billion J.P. Morgan analyst Kenneth Worthington had projected.
Total client assets reached $13.3 trillion, up 15%. Clients opened 1.2 million new brokerage accounts, bringing the total to 48.6 million.
Trading stayed busy. Daily average trades reached 10.7 million, up 44% from last year.
Margin loan balances rose 14% from the prior quarter to $187.9 billion. Pledged asset line balances jumped 59% from a year ago to $37.3 billion.
Schwab Wealth Advisory net flows grew 55% year over year. Managed investing flows set a quarterly record of $24 billion, up 22%.
CEO Rick Wurster said clients “continue to turn to Schwab for our broad set of wealth, trading, and banking capabilities.”
What Spooked Investors
Management guided full-year 2026 revenue and net interest margin growth toward the lower end of its prior outlook. Net interest revenue also came in below expectations.
Analysts pointed to a drop in transactional sweep cash balances and lighter buybacks. Those details raised questions about funding and the path of net interest income.
Analyst sentiment was already cautious. Evercore ISI started coverage at In Line with a $107 target, Truist cut its target to $125 from $130, and Wells Fargo issued a Hold rating.
The macro backdrop did not help. September CPI hit 3.7% against a 3.6% forecast, with core CPI at 2.6%, which is a rough setup for rate-sensitive stocks.
The stock had already slid about 10% over the past month. It closed Wednesday up 1.3% but is down 2.8% this year, while the S&P 500 is up 12.7%.
AI worries have also weighed on the name. In September, investors sold brokerage stocks on fears that AI cash tools could move money out of low-paying sweep accounts.
By mid-morning Thursday, SCHW was down about 5%. The S&P 500 stood at 7,698.07, off 0.27%, and the Nasdaq Composite was down 0.86%.
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