AMTD TD Ameritrade Holding Corporation

By Michael Wursthorn 

Discount brokerages are hoping President-elect Donald Trump keeps things interesting with his tweets after he takes office.

In the weeks since Mr. Trump's election, discount brokerages have seen a jump in trading activity among their clients -- day traders and mom-and-pop investors, among others -- pushing commission revenue higher at time when brokerages have struggled to boost trading fees.

"Just the social-media presence of the president-elect has an unambiguous effect on our business, which is making commissions every time somebody makes a trade," TD Ameritrade Chief Executive Tim Hockey said in an interview with The Wall Street Journal. "When statements are made by the most powerful man on the planet, then that drives investors and traders to take a position based on that tweet."

TD Ameritrade said it saw an average 487,000 client trades a day in the quarter ended Dec. 31, 11% more than the year before and the company's third best quarter ever. Mr. Hockey said trading surged following Mr. Trump's win and continued to pick up whenever the president-elect targeted his tweeting at a specific company.

When Mr. Trump took to Twitter on Dec. 6 to suggest the U.S. government cancel a planned order with Boeing Co. for a new version of Air Force One, trading in the aircraft maker's stock jumped 93% from its previous 15-day average, according to Mr. Hockey.

"I knew you were asset-sensitive, but now I guess you're tweet-sensitive as well," analyst Richard Repetto, of Sandler O'Neill + Partners, said on TD Ameritrade's quarterly earnings call with analysts Wednesday morning.

Mr. Hockey expects to see more trading spikes this year as Mr. Trump continues to single out specific companies in his social-media posts, with recent targets including Ford Motor Co. and General Motors Co.

Charles Schwab Corp., which also reported quarterly results Wednesday, said it saw an average 573,000 client trades a day for the fourth quarter, up 7% from the same period a year earlier, while new retail brokerage accounts were 182,000, up 21%.

Schwab's profit for the quarter was $522 million, up from $416 million a year earlier, on revenue of $1.97 billion, which was 17% higher.

Schwab didn't directly attribute the gains to Mr. Trump's social-media use but said clients relied on the firm's services to navigate events such as "the tumult of the president election."

A recent E*Trade survey of more than 900 active investors with at least $10,000 in an online-brokerage account found that three-fifths of those aged 25 to 34 had traded based on a tweet by Mr. Trump. Among those 35 to 54, 36% had done so, and among those 55 and over, 20% had.

Still, while Mr. Trump's tweeting has been a boon for brokerages and individual investors, a majority of Americans believe the president-elect's Twitter usage is a bad idea, according to a Wall Street Journal/NBC News poll.

TD Ameritrade, which is working to wrap up its deal to buy rival brokerage Scottrade Financial Services Inc., said the higher trading activity helped push revenue up 5.8% in the quarter. TD Ameritrade reported earnings of $216 million, or 41 cents a share, for its fiscal first quarter ended Dec. 31, up from $212 million, or 39 cents a share, a year earlier.

Revenue rose to $859 million from $812 million. Analysts polled by Thomson Reuters expected a profit of 41 cents a share on revenue of $859.2 million.

In October, TD Ameritrade announced a $4 billion acquisition of smaller rival Scottrade. A decline in stock trading and a relentless price war in commissions has stock sellers seeking new ways to make money. Mr. Hockey said TD Ameritrade is in the midst of integration planning after regulators allowed the deal to proceed, keeping it on track to close later this year.

Without giving specific numbers, Mr. Hockey said Scottrade has been just as busy in the last quarter. "Scottrade has seen many of the same industry effect we all have in the last quarter," he told analysts on the call.

Joshua Jamerson contributed to this article.

Write to Michael Wursthorn at Michael.Wursthorn@wsj.com

(END) Dow Jones Newswires

January 18, 2017 12:25 ET (17:25 GMT)

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