Investors always seem to be interested in companies that have recently conducted stock splits, which are tools companies can use them to alter their share price and share count without changing their market caps and equity value.
Stock splits typically occur after a stock went on a strong run and when management wants to make their shares more affordable for retail investors. Splits only change the number of shares outstanding, not a company's market value. Investors just end up with more shares that individually are worth less.
Investors also take notice when a company joins the benchmark S&P 500 Index because then all the funds tracking that index are forced to buy the stock. Put the two together and a stock is likely to draw significant interest. Meet the newest stock split in the S&P 500. It's soared 1,000% since its initial public offering (IPO), far outpacing the S&P 500, and Wall Street still views it as a buy.
Image source: Getty Images.
A more balanced online broker
Online brokers have become a growing part of the fintech ecosystem, with companies like Robinhood and SoFi gaining widespread recognition for helping bring commission-free online trading to retail.
Interactive Brokers (IBKR 0.78%) does this and more because it caters to a more diverse audience that includes retail traders, hedge funds and mutual funds, proprietary trading groups, and financial advisors. In 2024, 70% of the company's accounts belonged to retail traders, while 44% of commissions came from investors outside of retail.
Interactive Brokers is very tech focused, as the majority of its senior management team has a background in software engineering and the bulk of services offered are automated, from account opening to trade execution. Interactive Brokers joined the S&P 500 on Aug. 28 and also completed a 4-for-1 split in June after a nice run by the stock, which is up more than 70% during the past year.
Investors have largely enjoyed a bull market for the past three years, and this helps brokers because it fuels interest in buying stocks. In fact, more individual assets are invested in stocks than ever.
It's easy to see how this trend has played out in recent years when you look at Interactive Brokers' growth. In the second quarter of the year, the company saw 32% year-over-year growth in new accounts, adding more than a half-million new accounts in the first half of 2025, which is more than the company added in all of 2023.
Specifically, management on Interactive Brokers' second-quarter earnings call cited interest in its overnight trading offerings, in which investors can buy more than 10,000 U.S. stocks and exchange-traded stocks, as well as U.S. equity index futures and options, and fixed-income products. For many of the company's international clients, overnight hours in the U.S. line up with their daytime trading hours. Overnight trading volume at Interactive Brokers surged by 170% year over year in the second quarter, according to management.
A high valuation on a high-quality business
Interactive Brokers has executed well, which explains why the stock has soared since its 2007 IPO. Between 2020 and 2024, the company's earnings grew by 182%. The balance sheet has no long-term debt, and the company has plenty of growth opportunities, whether it's internationally or on the retail side in crypto. The company also leads with a tech-first approach.
Now, the story is no secret and the market has driven up the stock, which now trades at 32 times forward earnings. Although online brokers are always susceptible to a market decline or a bear market, which can damp the appetite for investing, the company has executed well and continues to build out its product set to offer more assets and capabilities that will draw in more investors.
Investors can continue to buy the stock, but may want to consider dollar-cost averaging after such a nice run.
