Interactive Brokers Profits When Trading Is Hot. What Hap…

Oleh Patinko • August 29, 2026

Revenue is built on trading volumes

Interactive Brokers (IBKR) is a global financial asset trading platform. It makes money whenever a customer trades a stock, options, cryptocurrencies, or other financial assets. The more customers it has and the more trades each customer makes, the more money it will make.

The AI-driven bull market has been quite kind to IBKR’s growth. Its total customers grew 34% year over year last quarter to 5.19 million, resulting in 30% growth in commission revenue. It also generates net interest income on cash balances and margin loans, which were up 23% year over year.

Profitability is also stellar, with a pretax profit margin of 77% last quarter. IBKR’s stock price is up 506% in the last five years due to this stellar profit margin and the fact that it has been able to grow its customer accounts by 5x from around 1 million in 2020. This was helped by its improved product offering for international trading, as well as by the bull market during the pandemic and in the last few years around AI.

Cyclicality is the price of doing business

A market–gaining stock brokerage IBKR is ly to deliver fantastic financial performance in a bull market. Bear markets are not so kind. Sure, trading is still going on, but when stock prices fall, it generally means some individual traders exit the market, and trading volume falls. This turns a previous tailwind into a headwind for as long as stocks remain in the doldrums.

This is the business cycle for IBKR, and a bear market will eventually arrive. In 2022, when stocks were in a bear market amid interest rate hikes and recession fears, IBKR’s customer account balance was nearly flat, underscoring how macroeconomic forces can affect its business. Still, the fact that it was able to stabilize its business during a bear market is a testament to its market gains.

Data by YCharts. PE = price-to-earnings.

Should you buy IBKR stock?

When evaluating brokerage stocks, one also needs to factor in interest rates and how they can affect cash being kept in brokerage accounts. How rates average out through both types of markets will help determine a brokerage’s true long-term earnings.

For instance, more assets on the platform at IBKR have meant a growth in net interest income. And yet, this net interest income is currently growing more slowly than the overall customer count. This is because interest rates are down globally in the last year, meaning IBKR doesn’t earn as much in interest income on idle cash balances. In a bear market, interest rates are ly to fall, which could affect the business’s earnings growth.

NASDAQ: IBKR

Interactive Brokers Group

Premium Feature

Moneyball Superscore

84/100

Today’s Change

(-0.73%) $-0.71

Current Price

$95.84

Key Data Points

Market Cap

$167BMarket cap calculated using publicly traded s outstanding only. Does not include unlisted, private, or dual-class non-traded s. Implied market cap may vary.

Day’s Range

$95.45 – $97.72

52wk Range

$58.95 – $98.75

Volume

2.2M

Avg Vol

4.7M

Gross Margin

95.31%

Dividend Yield

0.34%

Another factor to consider is stock valuation. IBKR stock currently trades at a price-to-earnings ratio (P/E) of 38.5, and this is valuing it on trailing earnings in a multi-year bull market. If a bear market occurs and lasts for years, IBKR’s customers, net interest income, and ly overall earnings may fall temporarily. This could make it a dangerous investment to buy at a P/E ratio close to 40.

That’s why it’s important to make any decision on IBKR stock with a long-term investment view. IBKR should continue gaining market over the long term, which is why the stock trades at such a premium earnings multiple today. I don’t think it is smart to buy into the stock at this premium P/E ratio, but investors should keep it on the watch list to see if it ever gets cheap again. That’s when a long-term investment might make sense.

Brett Schafer is a contributing Motley Fool stock market analyst covering consumer goods, financials, technology, and industrials. Brett is a self-taught investor and has hosted the Chit Chat Stocks podcast since 2018. He previously worked as a lab engineer for science laboratories. He holds a bachelor’s degree in mechanical engineering with minors in finance and mathematics from Washington State University. His lab work on Major League Baseball’s juiced ball problem was featured in The Wall Street Journal and other national outlets.

TMFBrettSchafer

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