E*Trade DARTs Rise As Customer Internals Weaken (ETFC)

By Douglas A. McIntyre Published Aug 15, 8:01AM EDT

E*Trade Financial Corp. (NASDAQ:ETFC) released the industry metric that Wall Street looks at to see how its overall trading revenues are going. Its DARTs (daily average revenue trades) rose a whopping 20.8% in July over the June reading, which is a fairly substantial number. It also opened 100,787 gross new retail accounts to end with 4,658,228 retail accounts.

That is a great increase in trading for a firm, but it comes at a time when the internals appear to be weakening. Its total retail assets decreased 1.9% sequentially to $208.8 Billion. This can fluctuate because of the market and it is no secret that the second half of July was painful after the stock market hit new highs earlier in the month. This is not out of the norm.

But its margin debt balances are increasing. End of period margin debt rose 5.5% sequentially to $7.9 Billion, with average debt margin balances showing a 5% gain to $7.6 Billion. When you consider that the company did many mortgages in the past few years, this margin debt increase needs to be watched. That isn’t a total killer for margin increases, but a couple more months of that would not be a welcoming sign to its retail customer base.

The company is trying to stave of weakness. E*Trade’s president & COO, Jarrett Lilien said the franchise remains strong and doesn’t believe the current market cap reflects performance. So he noted the company has been increase share buybacks over the last two weeks.

So far, shares of E*Trade are up 0.5% at $15.08 in pre-market activity.

Jon C. Ogg
August 15, 2007

Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.