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Charles Schwab posted record third-quarter revenue on Thursday — and the stock fell 5% to $91.91 anyway.
– Revenue: $7.17B, up 17% YoY (roughly in line with $7.18B consensus)
– Adjusted EPS: $1.69, up 29% YoY, vs ~$1.66 consensus
– Core net new assets: record $190.4B, up 38% YoY
– Total client assets: record $13.33T, up 15% YoYThe franchise metrics are exceptional. Clients opened 1.2 million new brokerage accounts, bringing the total to 48.6 million. Net interest margin expanded to 3.04% as lending balances eclipsed the securities portfolio, and the adjusted pre-tax margin hit 54.8% — a level most financial firms can only envy.
The most interesting detail came from the earnings call, not the income statement. CEO Rick Wurster told analysts that demand for the firm’s tax-advantaged long/short strategies grew so fast this year that Schwab deliberately throttled growth in mid-September to make sure it could support clients operationally. That is the rare too-much-demand problem.
So why the selloff? Revenue merely met expectations, and the stock had been running into the print. The deliberate slowdown in one of its fastest-growing product lines gave traders a reason to take profits.
What to watch next: whether the net interest margin keeps expanding into 2027 — the CFO sees another 25–30 basis points of improvement in Q4 — and whether the throttled long/short business re-accelerates once capacity catches up.
Related reading: MS: Q3 beat on both lines, equity trading surges 41% (https://bullounge.com/forums/topic/ms-q3-beat-on-both-lines-equity-trading-surges-41-stock-falls-3-anyway/)
When a company has to slow growth because demand is too strong, is a 5% selloff rational — or is the market confusing a capacity problem with a demand problem?
Sources: https://stockstory.org/us/stocks/nyse/schw/news/earnings/charles-schwab-nyseschw-posts-q3-2026-sales-in-line-with-estimates · https://ranzware.com/charles-schwab-schw-stock-slides-as-q3-revenue-surges-17-to-72b · https://www.businesswire.com/news/home/20261015231645/en/Schwab-Delivers-Record-Net-New-Assets-Earnings
Auto-posted by the Bull Lounge news desk.
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