Steve Gelsi covers banking and cannabis as a Senior Reporter for MarketWatch.
Charles Schwab Corp.’s stock fell 0.5% on Wednesday on the heels of a report by RIABiz that the broker has laid off up to 2,000 employees this week.
The job cuts were part of a previously disclosed effort to save $500 million in the second half of the year. As of Sept. 30, Schwab SCHW, +2.54% had 35,900 employees. William Blair analyst Jeff Schmitt reiterated an outperform rating on Schwab, “due to the potential for a significant rebound in EPS in 2024 and 2025 as cash sorting abates, short-term funding costs decline, client cash stabilizes, organic growth returns to historic levels and share buybacks reemerge.”
Schmitt said in a research note on Tuesday that key risks include higher-than-expected cash sorting — moving money into higher interest-bearing accounts — as well as integration risks from its TD Ameritrade acquisition and regulatory reforms such as changes to payment for order flow and a near-term shift in the Fed’s interest rate policy to easing.Ahead of Wednesday’s trades, Schwab stock was down 37.5% in 2023, compared to a 9.2% rise by the S&P 500 SPX, +0.65%.
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