Online Brokerage Company Shares Surge on Stock Splits
Jerry:
Well here is something I found which might explain partially why online brokerages are hot.
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Mon, 01 Feb 1999, 4:25pm EST
Omaha, Nebraska, Feb. 1 (Bloomberg) -- Ameritrade Holding
Corp. and E*Trade Group Inc. surged, as investors snapped up
shares of online brokerages splitting their stock amid reports
they're gaining business from full-service brokers.
Shares of Omaha, Nebraska-based Ameritrade, which is
splitting its stock 2-for-1 Feb. 22 for shareholders of record
Feb. 5, rose 26 15/16, or 34 percent, to 107 3/16 on volume of 4
million shares, five times its three-month daily average. It
earlier rose as high as 110 1/2. Shares closed at 50 on Jan. 22.
Shares of Palo Alto, California-based E*Trade Group Inc.,
which split its shares 2-for-1 effective today, jumped 9 1/8, or
17 percent, to 64 3/8 on volume of 15.8 million shares, more than
twice its three-month daily average. It's the second biggest
point gain ever for a stock first sold to the public in August
1996 at a split-adjusted price of 5 1/4. Stock in the No. 3
online brokerage is up by two-thirds in seven trading days since
Jan. 21.
Officials at the two companies said they don't know any
particular reason for the price rises.
''When a stock's moving like this there's probably three or
four rumors out there,'' said J. Joe Ricketts, chairman and chief
executive of Ameritrade. ''There may be a little bit of an
emotional attachment'' to the stock as well, he said, with
investors ''wishing they'd bought two years ago,'' because ''if
you're not in the market segment now you're probably not going to
be.''
Also rising were online brokers Siebert Financial Corp., up
7 13/16, or 63 percent, to 20 5/88; J.B. Oxford Holdings Inc.,
which doubled to 5 5/32, up 2 9/16, and Southwest Securities
Group Inc., up 3 1/16, or 11 percent, to 32.
Donaldson Lufkin & Jenrette Inc., which said last week that
it may sell shares to the public in its DLJ Direct online
brokerage, rose 2 3/4 to 52 7/8, while Toronto-Dominion Bank,
which may sell shares in its Waterhouse Investor Services Inc.
online brokerage, rose C$2.15 to C$65.15.
Knight/Trimark Group Inc., the largest market maker in
Nasdaq stocks, rose 5 1/4, or 12 percent, to 50 5/8. E*Trade and
Ameritrade are among Knight's four biggest outside shareholders.
Charles Schwab Corp., the biggest online broker, fell 3/16
to 70 1/8. Schwab split its stock 3-for-2 on Dec. 11.
An article in today's New York Times said large brokerages
are trying to step up their online trading efforts in response to
discount brokers' success.
''I think the Times article has something to do with it, it
implies these guys are a good buy'' said Scott Appleby, analyst
with ABN Amro Inc. ''Long-term these guys are still in a good
position, but clearly the valuations leave me a little tepid.''
Also today, Critical Path Inc., which makes e-mail software
for large Web sites, said it's filing for an initial stock sale.
E*Trade accounted for 62 percent of Critical Path's 1998 revenue
of $897,000 and owns 12.9 percent of the company' stock.
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