Tradestation GroupTRAD

Morningstar Rating

Stock Research and Analysis

by Jason Ren

TradeStation's proprietary trading platform affords the firm an attractive niche during volatile markets. However, with no indication of when the federal funds rate will rise and improve TradeStation's net interest income, gaining operating leverage Read more

Bulls Say

The company is just beginning operations in Europe. If it can obtain a significant retail or institutional footing there, revenue will jump.

TradeStation offers the most sophisticated, award-winning toolset for active retail traders. The firm's niche appeal makes it unlikely that others will encroach on its space and steal clients.

Once hiring calms down and the federal funds rate recovers, employee costs should become more scalable, boosting profit margins. Read more

Bears Say

Customer stickiness works both ways. If traders at TradeStation's competition become entrenched with those respective interfaces, they may not feel the need to move up to TradeStation's more sophisticated toolset.

With its power over interest rates, the Fed largely determines the growth or decline of TradeStation's net interest income, its second-largest revenue generator.

According to its CEO, TradeStation "lives and dies by the sword," with its narrow focus on active traders. While volatility normally helps revenue, the recent historic stock market decline may have forced some customers out of trading, and out of TradeStation's revenue base, completely. Read more

Strategy

TradeStation embraces its small niche in online retail brokerage, specifically catering its services to active traders. Generally, it adds accounts by targeting other brokerages' more sophisticated traders Read more

Management

Cofounders William and Ralph Cruz stepped down as co-CEOs in 2007 in favor of Salomon Sredni, an upper-management veteran. He and CFO David Fleischman have largely stuck to promoting and enhancing the company's core electronic trading platform. Time Read more

Profile

TradeStation is an online retail brokerage firm that caters to sophisticated active traders. Its core competency is its proprietary electronic trading platform that allows Read more

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