Charles Schwab (NYSE: SWE) Schwab’s stock price fell on Thursday due to events beyond the company’s control. The most important news for the brokerage was that a major shareholder sold part of his Schwab holdings at a discount.
Schwab’s share price fell in return. By the end of the trading session, the company’s shares had lost 0.5% of their value. This was S&P500 The index recorded a decline of 0.8% on the day.
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As part of its earnings report for the third quarter of fiscal year 2024, the Canada-based Toronto Dominion Bank (NYSE: TD) announced it sold 40.5 million shares of Schwab’s common stock. The company earned about $2.5 billion from the sale, which equates to an average share price of $61.73, well below the broker’s recent closing price of $64.27 per share.
The move was part of an attempt to shore up the bank’s finances. For the quarter, it booked a provision of 2.6 billion Canadian dollars ($1.9 billion) to pay fines expected to be imposed by the U.S. Department of Justice (DoJ), which is currently in the midst of an investigation into the bank’s anti-money laundering (AML) efforts.
The sale of shares reduces Toronto-Dominion’s stake in Schwab to just over 10 percent. Before the sale, this share was 12.3 percent.
Already not in the market’s favour
Although extenuating circumstances were the driving force behind Toronto-Dominion’s divestment, investors have generally been cool toward Schwab of late. Earlier this summer, the company announced it was slimming down its banking business, and some market participants weren’t too happy with that strategy. Meanwhile, the company reported second-quarter net income that was little different from the year-ago figure.
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Charles Schwab is a promotional partner of The Ascent, a Motley Fool company. Eric Volkman holds a position in Charles Schwab. The Motley Fool holds a position in and recommends Charles Schwab. The Motley Fool recommends the following options: short September 2024 $77.50 calls on Charles Schwab. The Motley Fool has a disclosure policy.
Why Charles Schwab shares took a hit on Thursday was originally published by The Motley Fool
