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Charles Schwab Stock Falls Following Q3 Revenue Miss and Higher Funding Costs

BearishMedium impact
SCHW$91.87 −2.44%

Shares of Charles Schwab Corp. (SCHW) fell over 2.5% on Friday following mixed third-quarter financial results and updated analyst forecasts. The financial services company delivered adjusted earnings of $1.69 per share, topping the expected $1.66 per share. However, quarterly revenue rose 17% year over year to a record $7.17 billion, falling just short of the $7.19 billion Wall Street consensus estimate.

Investor concern centered on squeezed profit margins and reduced capital returns. Total deposits fell for a third straight quarter to $244.1 billion as clients transferred cash into higher-yielding investments. Combined with strong loan demand, the firm relied more heavily on expensive short-term wholesale funding. Sentiment was further impacted by a $500 million share repurchase program, which fell short of market expectations of roughly $1.4 billion.

Looking ahead, market participants will monitor whether deposit growth catches up with lending demand to relieve margin pressures. Analysts also point to rising adoption of artificial intelligence trading tools—where active client usage doubled over six months—as a potential driver for higher trading activity and operational efficiency.

Key points

  • Charles Schwab Corp. reported Q3 adjusted earnings of $1.69 per share, beating expectations of $1.66 per share.
  • Revenue increased 17% year over year to $7.17 billion, slightly missing estimates of $7.19 billion.
  • Deposits fell to $244.1 billion for a third consecutive quarterly decline, increasing reliance on wholesale borrowing.
  • The company announced a $500 million share buyback, below investor expectations of $1.4 billion.

Written by our AI from expert market sources across the web. It can contain mistakes: check the facts before acting on them. Write-ups powered by the free AI API at FreeTheAI.org

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Questions and answers

Why is Charles Schwab stock dropping?

Charles Schwab stock fell due to a slight revenue miss, falling deposits, higher borrowing costs, and a $500 million share buyback that came in below investor expectations of $1.4 billion.

What were Charles Schwab's Q3 earnings results?

Charles Schwab reported adjusted earnings of $1.69 per share on record revenue of $7.17 billion. Earnings beat expectations of $1.66 per share, while revenue narrowly missed estimates of $7.19 billion.

How much did Charles Schwab deposits decline in Q3?

Deposits dropped to $244.1 billion during the third quarter, marking the third consecutive quarterly decline as clients moved cash into higher-yielding investments.