- Traders betting against Beyond Meat and weed stocks boosted TD Ameritrade's fiscal fourth-quarter earnings, CEO Tim Hockey told Bloomberg News in an interview.
- The earnings boost came at a time when brokerages are looking to offset revenue lost from cutting commissions on trading to zero.
- Hockey told Business Insider that he's looking to technology such as using the public cloud to make up for some of the revenue lost.
- Read more on Business Insider.
Traders betting against Beyond Meat and weed company stocks gave TD Ameritrade a boost, the brokerage's CEO Tim Hockey said in an interview with Bloomberg News.
There were enough people who wanted to place short bets on cannabis stocks and Beyond Meat that shares were a hot commodity, which boosted fees, Hockey said.
The bump to TD Ameritrade's stock loan businesses helped fiscal fourth-quarter 2019 earnings Tuesday, when the company reported earnings per share of $1.05, higher than Wall Street's consensus estimate of 98 cents. Shares of the company rose as much as 3% on the news.
Hockey told Bloomberg that he can't forecast that short selling will boost TD Ameritrade again in the future. Beyond Meat is currently the most expensive stock to short, according to S3 Partners, a financial analytics firm. In addition, a number of cannabis stocks including Tilray, Aurora Cannabis, and Canopy Growth top S3's list, Bloomberg reported.
Still, the help on quarterly earnings comes at a good time for the brokerage. In October, TD Ameritrade stock plunged as much as 25.7% when Charles Schwab announced that it would cut commissions on stock, ETF, and options trades to zero. TD Ameritrade announced that it would also slash fees to zero on the same day, and Etrade followed a day later.
Now, brokerages are looking for ways to offset the lost revenue from those commissions, Hockey told Business Insider's Dan DeFrancesco and Rebecca Ungarino in an interview. Based on TD Ameritrade's 2019 revenue, zero commissions will mean roughly $900 million lost, Hockey said.
While making up that much lost revenue won't happen overnight, Hockey said, he's looking at measures like moving to the more efficient public cloud, which could cut costs and allow increased innovation.