On 09.08.2019 the shares reached price $46.5. Investment idea brought about 9.64% yield in 24 days
Interactive Brokers LLC
Sell: market ($51.13)
Take profit: $46.5
We suppose that the company is oversold in comparison to its competitors.
In our opinion, the company is developing slower than its competitors and is missing the retail market.
- TD Ameridate enables cryptocurrency purchases in collaboration with ErisX.
- Robinhood has adopted a subscription model and doesn’t charge for trading. It currently has more than 4 million users.
- Schwab offers a product called Intelligent Portfolios for automated creation of investment portfolios.
Additional pressure on IB’s business might soon be caused by the following events and factors:
- Decreasing interest rates policy will reduce the cost-effectiveness of the brokerage business.
- The potential introduction of a tax on operations with securities that has been proposed by Bernie Sanders, the Democratic presidential candidate. If the tax was introduced, as a broker-discounter with the lowest margin, IB would suffer considerable losses due to the decreased number of operations and the business’s profitability.
Nevertheless, the company has several strong points which are the reasons for the cautious approach to the short-selling of the security. For example, IB has recently launched a major advertising campaign for a sports betting simulator. It is quite an interesting strategy of attracting those users who are inclined to take risks. A user has 1000 USD on his or her virtual account. The money that has been won by betting on sports event could be used to pay for commissions on the Interactive Brokers trading account.
Additionally, many fintech companies are using IB as a primary broker when providing services to their customers because IB doesn’t have its own positions and is one of the most reliable partners in the industry.
Technical analysisThe following patterns can be clearly observed on the graph:
- strong resistance on the level of $58-$60 starting in September 2018;
- attempts to reach SMA 100 were unsuccessful during the past year;
- the price is trying to break of the upward trend since April 2017. A similar attempt took place at the end of May 2019 and on July 15, 2019.
Another argument to support the security is that its correction from the overall progression already amounts to 50% since 2018 whereas the oscillator is in the zero range on daily and weekly graphs.
We are opening market short on a half of funds allocated for the idea, we plan to average the other half in case of the price reaching $55. IBKR is one of the few short positions in the portfolio, that’s why we do not set a stop loss for this investment idea.
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