Schwab stock had a rough week, to say the least, given that it’s down 17.33%. My thing is, I really can’t see any practical reason as to why. Financially-speaking they either met, or fell just short/above expectations. From what I understand, the big thing was that they decided to pause buybacks to focus on paying down their debt, which apparently was horrible enough news to warrant a pullback like this.
Personally, I’d almost expect the opposite to happen. I wouldn’t expect a massive gain from it or anything, but I can’t see this as anything but a positive in the long run. Yes, you could make the argument that pausing the buybacks can take away from investors’ immediate returns, but less debt now translates to a stronger balance sheet overall and freeing up more capital to potentially return to shareholders later, either via dividends or a strengthened buyback program.
All that said, personally, I’d say that a good chunk of the drop was due to panic selling. Larger moves aren’t seen very often in stocks like SCHW, and when they do happen, they’ll usually trigger a temporary up/downturn. Investors saw a larger-than-average drop on earnings, which soured sentiment, and led to a larger selloff.
Of course I’m open to other opinions, if you can see something I can’t I’d love to hear it.
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