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IBKR Stock Gains on Higher April DARTs: Should You Buy, Hold, or Sell?

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As broader markets continue to witness volatility, Interactive Brokers Group, Inc. (IBKR - Free Report) reported a rise in its client Daily Average Revenue Trades (DARTs) on a year-over-year basis for April 2025.
 
Total client DARTs for April were 3,818,000, representing a 63.2% increase from April 2024. This was primarily driven by higher net new accounts alongside options and futures contract trading.

Since the announcement of DART numbers on May 1, shares of Interactive Brokers have risen 2.3%, underperforming the industry but outperforming the Zacks Finance sector. Its close peers,  Charles Schwab (SCHW - Free Report) and TradeWeb Markets Inc. (TW - Free Report) , rose 1.6% and 3.8%, respectively, in the same time frame.

IBKR Price Performance Since DART announcement

Zacks Investment Research
Image Source: Zacks Investment Research

Interactive Brokers has been benefiting from heightened market volatility and a rise in client activity on tariff concerns and rising geopolitical risks. Likewise, Schwab and Tradeweb are likely to have recorded a rise in new account openings and trading volume for April 2025.

The momentum is expected to continue as markets and investors try to decipher the impact of tariffs on various sectors. Thus, IBKR will likely keep witnessing a rise in total client DARTs.

Other Factors Supporting Interactive Brokers

Global Exposure Through Product Diversification: IBKR has been taking several steps to enhance its presence globally. On Tuesday, the company extended trading hours for its Forecast Contracts to about 24 hours a day, which will further boost its trading income. This move comes nearly a month after it launched Forecast Contracts in Canada, allowing investors to trade on the outcomes of several events impacting markets. In February, the company announced the expansion of its offering of Stocks and Shares Investment Savings Accounts with the addition of mutual funds in the U.K. This would allow investors to access a wide range of investment products in a tax-efficient savings vehicle, along with advanced trading platforms, low fees and global diversification.

Last November, IBKR launched Plan d’Epargne en Actions accounts to boost its offerings for its French clients. Also, the launch of IBKR GlobalTrader has enabled investors worldwide to trade stocks through mobile applications.

The company was one of the first brokers to introduce Overnight Trading on U.S. stocks and ETFs nearly 24 hours a day, five days a week. IBKR Lite has enabled investors to trade commission-free. Further, it launched cryptocurrency trading via Paxos Trust Company, charging lower commissions compared to other crypto exchanges. The introduction of IBKR Desktop, the next-generation desktop trading application for Windows and Mac, marks a new chapter for innovation.

The company’s technological superiority, combined with easier regulations to improve product velocity, will support its net revenues through higher client acquisitions.

Technological Excellence: Interactive Brokers’ technological superiority remains one of its strongest aspects. The company processes trades in stocks, futures, options and forex on more than 150 exchanges across several countries and currencies.
 
IBKR’s compensation expense relative to net revenues (10.8% in the first quarter of 2025) remains below its industry peers due to its superior technology. Further, the company has been emphasizing developing proprietary software to automate broker-dealer functions, leading to a steady rise in revenues. Total net revenues witnessed a compound annual growth rate (CAGR) of 21.8% over the last five years (2019-2024). The momentum continued in the first three months of 2025.
 
Net revenues are expected to improve further in the quarters ahead, given the solid DART numbers and robust trading backdrop driven by higher market participation.

IBKR’s Sales Estimates

Zacks Investment Research
Image Source: Zacks Investment Research

IBKR Shares are Undervalued

IBKR shares appear inexpensive relative to the industry. The company is currently trading at a 12-month trailing price-to-tangible book (P/TB) of 1.12X, well below the industry’s 2.77X.

Price-to-Tangible Book Ratio (TTM)

Zacks Investment Research
Image Source: Zacks Investment Research

Also, the stock is trading below its peers, Tradeweb and Schwab. At present, TradeWeb and Schwab’s 12-month trailing P/TB TTM are 14.32X and 7.74X, respectively.

From a valuation perspective, Interactive Brokers shares present a compelling buying opportunity. The stock is still trading at a discount as the market has not yet fully recognized or priced the company’s growth prospects.

Analyst Sentiments Bearish for Interactive Brokers

Over the past month, the Zacks Consensus Estimate for 2025 and 2026 earnings has been revised 3% and 3.2% downward to $7.10 and $7.58, respectively.

Estimate Revision Trend

Zacks Investment Research
Image Source: Zacks Investment Research

The projected figures imply a rise of 1% and 6.8% for 2025 and 2026, respectively. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Parting Thoughts on Interactive Brokers Stock

Interactive Brokers remains well-positioned for growth in the current volatile operating environment. Also, rapidly evolving trends will benefit the company’s revenues and expand its market share. The company’s strong technological capabilities and diversified product offerings enhance its global reach, supporting long-term growth. Further, undervalued shares are another positive.

However, Interactive Brokers has witnessed a persistent rise in non-interest expenses over the past few years. Expenses witnessed a CAGR of 13.8% over the five years ended 2024, with the trend persisting in the first quarter of 2025. These are likely to remain elevated due to continued investment in franchises, product launches and technology upgrades. Moreover, rising geopolitical risks, foreign exchange fluctuations and tariff concerns are likely to subdue global growth prospects as reflected in the bearish analyst sentiments.

IBKR remains a cautious bet at the moment for investors. Those who own the stock can continue holding it.
 
At present, IBKR carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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