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Charles Schwab (SCHW) Eyes Private Markets On Forge Deal As Undervalued View Holds

Simply Wall St · 2d ago

Charles Schwab (SCHW) is reshaping its offering after agreeing to acquire Forge Global, a platform for trading late stage private companies. The deal opens a route into pre IPO shares and related digital asset infrastructure.

Recent trading shows a mixed picture for Charles Schwab. The shares are at US$99.10 after a 1 day share price return of 0.81%, yet the 30 day share price return is down 10.04%. Momentum has softened despite a 3 year total shareholder return of about 2x and a 1 year total shareholder return of 5.13%.

Scan how Charles Schwab's move into private markets compares with other potential opportunities by reviewing our curated list of 17 high quality undiscovered gems across the broader financial sector.

Charles Schwab is leaning into private markets just as recent share performance softens. Is this price reflecting a cooler mood around the stock or the actual earning power of the underlying business?

Most Popular Narrative: 21% Undervalued

Against a last close of $99.10, the most followed narrative places Charles Schwab's fair value at $124.95, implying a sizeable valuation gap that depends on how effectively the firm converts scale, lending and private markets into sustained earnings power.

The main factor that has to go right is Schwab successfully scaling higher margin lending, managed advice, and new areas such as private markets and crypto, while using AI and process improvements to keep expense growth below revenue growth and maintain its low cost base.

See why 70 investors see Charles Schwab as 21% undervalued.

Result: Fair Value of $124.95 (UNDERVALUED)

Still, this narrative can crack if competition from low cost brokers squeezes trading fees, or if rising technology and Forge related costs outpace revenue growth.

Find out about the key risks to this Charles Schwab narrative.

Next Steps

If the mixed sentiment around Charles Schwab leaves you unsure, shift your focus from headline impressions to hard numbers and form your own view using 5 key rewards and 1 important warning sign.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.