How will E-Trade fare in a brave new commission-free world?
Amid news that the majority of brokerage firms are eliminating commissions on individual trades, E-Trade Financial Corp. could be a winner…
As of the end of the market day yesterday, CNN Business listed E-Trade as one of the biggest gainers with an increase of 2.25%. Although, it’s since dropped, as E-Trade traded sideways this morning.
Some analysts were also optimistic about E-Trade yesterday. Some compared E-Trade to TD Ameritrade and suggested that as the elimination of commissions changes the industry quickly, E-Trade would be a more appealing competitor.
CNN Business noted some of E-Trade’s significant value propositions, including customer service and ease of use, along with its compatibility with Google Assistant Voice.
In a world where price isn’t a differentiator anymore, some believe that E-Trade will thrive. It may be just what users are looking for: an easy way to get into the market and check accounts.
But others point to a rapidly diversifying industry with newcomers like Robinhood adding cryptocurrency options and more to the brokerage menu. This diversification, they say, could dent established brokerage chains like E-Trade and Charles Schwab.
Experts urge investors to keep a keen eye out for new fees. Brokerages will likely need to counterbalance the elimination of commissions. So anyone looking for a broker should vet what the company can offer the average trader — beyond no commissions.
E-Trade Market Moves
In rallying some 3% over the past week, E-Trade reverses a major crash from September 30 where the stock plummeted from $43 down to a low of $35.20.
Back in August, E-Trade was on a grim slide from highs near $52 to an eventual dip near $40. In fact, six months ago, E-Trade started out near $50, cresting at $51.27 April 29.
Since then, the equity is up and down. But it’s significant that E-Trade lost a full one-fifth of its value over the past year, with 52-week highs of $54.44 and 52-week lows of $34.68. For a firm with a market cap of $8.8 billion and a well-known player in its segment, that’s a troubling trend.
But now E-Trade bulls point to a range of financial services. That includes the trading of common stocks, preferred stock, futures contracts, ETFs, options, and mutual funds. This just may be a strong long-term strategy in the commission-free days to come.
Bitcoin ETF Could Be a Game Changer
An upcoming SEC deadline on a Bitcoin ETF could also be helpful to established brokers … It would offer traders an easy way to get into Bitcoin without putting a lot of money down upfront.
Keep an eye on E-Trade values as equity prices continue to oscillate. At the opening bell, E-Trade weighed in at $36.68 and moved relatively sideways for a while, countering a dip with commensurate gains.
Time will tell how E-Trade will perform throughout the day and the week ahead. Especially as markets digest the news that traders won’t be shelling out $7–$10 anymore for each trade.
Justin Stoltzfus writes for Lancaster Newspapers in Lancaster, PA, as well as numerous digital publications like Answerstock, Techopedia, Warrior Trading, and Breaking Modern. His finance reporting has been featured on Motley Fool, Mint.com, and other sites. Stoltzfus is a graduate of James Madison University in Harrisonburg, VA.