IBKR is a global, low cost trading platform for active traders that is fully scaled and has ~60% operating margins.
Globally, there has been a surge in interest in equities and investing. Russia, U.S. China, Sweden, UK, Israel, Brazil etc, have all seen a surge in account openings. We can debate the reasons why, but the resulting account growth is something that may not be a short term phenomenon. E.g. Russia has decided to tax bank deposits to fund its coronavirus package.
The international growth opportunity for IBKR is very large, with little competition. International makes up 63% of accounts, ~50% of client assets.
IBKR account growth has accelerated to >30%, but near-term this has been eclipsed by falling interest rates and net interest income compression.
IBKR account growth can sustain ~15% plus over the next few years.
We see little downside in EPS estimates. Upside scenario gives EPS 16% and 27% above street for 2021 and 2022 respectively.
Free option on interest rates ever rising. (Not in our upside scenario)
One thing that may put you off, shareholder structure: Thomas Peterffy controls 81.5% of the voting and economic interests of the company. Liquidity is ~25$m per day.
Potential Upside: $74 (+50%)
Sensible Downside: $42 (-15%)
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