If you’re a frequent trader in the financial markets, there’s a good chance that you’re familiar with Interactive Brokers Group (NASDAQ:IBKR). Indeed, you’ll probably know the name even if you haven’t considered owning IBKR stock.
Many sophisticated traders have chosen to use Interactive Brokers’ self-directed online trading platform. In stark contrast to this is Robinhood, a company with an app-based trading platform that appeals to new retail investors.
It’s tempting, no doubt, to get caught up in the buzz surrounding the likely soon-to-come Robinhood initial public offering (IPO). After all, the Robinhood app is extremely popular.
Yet, not everyone wants to speculate on a hyped-up IPO stock. So, if you’d like to take a position in something more solid and established, I invite you to consider investing in Interactive Brokers.
A Closer Look at IBKR Stock
Greenwich, Connecticut-based Interactive Brokers launched its IPO on May 3, 2007. Initially, the shares were offered at $30.01 apiece.
Safety-focused investors should appreciate the relatively long history of the stock and the company. Even though the IPO took place a year before the Great Recession, Interactive Brokers and its long-term stakeholders survived and seem to be doing well today.
Indeed, the bulls really took charge of IBKR stock in 2018, bringing the share price up to nearly $80 at one point. However, they couldn’t maintain the momentum and the stock price declined after that.
Thus, in March of 2020 the stock hit a bottom of $33.70. But then, a spectacular rally began. Today, the bulls have propelled the stock to around $79.
A long-term buy-and-hold strategy has benefited IBKR stockholders. There were tough times along the way, but this is a textbook example that patience pays off in the end.
A Market for Sophisticated Traders
As you might have gleaned from the introduction, I would tend to characterize Robinhood as the domain of amateur traders.
In contrast to that, I would assert that the Interactive Brokers platform is geared towards more sophisticated market participants.
I can’t speak to everyone’s experience. However, from my personal observations, the Robinhood platform looks almost like a video game, while Interactive Brokers looks more serious.
To be fair, that’s evidently what the company is doing, as a Robinhood spokesperson recently stated, “We’re making investing less scary, more accessible, personal, and easier, and offering features and tools that are optimized for mobile.”
Advocates might call Robinhood “more accessible,” but I’d counter that there will always be a market for seasoned traders.
The data seems to bear this hypothesis out as Interactive Brokers reported 3,695,000 daily average revenue trades for February 2021. That marks an astonishing 175% year-over-year increase.
Taking the Top Spot
I know what some of you might be thinking. Interactive Brokers should thank Robinhood for its vast increase in trading volumes.
Granted, there’s merit to that argument. Robinhood (with some help from the Reddit crowd) has brought financial market trading into the mainstream culture.
That being said, just because Robinhood is popular doesn’t mean that it’s always considered the best broker.
When Barron’s tested out most of the well-known trading platforms recently, Interactive Brokers took the top spot among 2021’s best online brokers.
For the first time, the Robinhood app was included among the contenders. But it didn’t even make the top 10.
Not that the Barron’s assessment is not the be-all and end-all. Opinions will always vary, and Robinhood will likely remain popular for years.
My point is that Interactive Brokers has its place among a certain segment of the trading community. It’s a respectable place, and it’s bigger than you might think.
The Bottom Line
Interactive Brokers isn’t the flavor of the month, but the company and the platform have been around for a long time and there’s something to be said for that.
Besides, IBKR stock has been a strong performer lately. Don’t expect massive buzz or controversy when it comes to Interactive Brokers – just a solid investment that’s built to last.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
