Ten years ago, shares of Interactive Brokers (NASDAQ:IBKR) closed out September 2016 at a split-adjusted $8.82 (the company split its stock 4-for-1 in June 2025). The stock trades around $91 as of this writing.
The price alone increased about tenfold. And with the brokerage company’s modest dividend reinvested along the way, a $10,000 investment made at the end of September 2016 has grown into about $110,000.
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The S&P 500 (SNPINDEX:^GSPC) had a very good decade of its own, and a $10,000 position in an index fund tracking it, dividends reinvested, grew to about $41,500 over the same stretch.
Interactive Brokers’ shareholders earned more than twice that. Compounded, the stock returned about 27% a year while the index did about 15%.
A gain like that requires more than one good year. It came from a customer base that grew nearly 15-fold, from the interest the company earns on those customers’ cash, and from a choice in 2017 to become a simpler, more profitable company.
Image source: The Motley Fool.
The customer base grew nearly 15-fold
At the end of September 2016, Interactive Brokers had 370,000 customer accounts, 15% more than a year earlier. As of the end of August, the count stood at 5.46 million, 35% higher than a year ago and nearly 15 times the September 2016 figure.
The money came with them. Customers had $82.7 billion of equity on the platform at the end of September 2016. By the end of this August, that figure had reached $962.8 billion, more than 11 times as much.
What impresses me most is that the pace has picked up as the base has grown.
The count grew 32% in 2025. By the end of June this year, the growth rate was 34%, and by the end of August it was 35%.
In other words, ten years in, the company is gaining customers faster than it did at the start of the run, when the base was a fraction of its present size.
A very different business
Customers bring cash as well as trades, and the company receives interest on that money. That includes the idle cash held in accounts and the margin loans it makes against customer holdings. In 2016, that net interest income came to $527 million. Last year, it exceeded $3.5 billion, nearly seven times as much and now the company’s biggest source of revenue. In this year’s second quarter, net interest income was $1.06 billion — 23% higher than the year-ago quarter and over half the $1.9 billion of net revenues the company reported.
The company also changed what it is. In 2016, Interactive Brokers’ earnings releases described the company as “an automated global electronic broker and market maker.” In March 2017, it said it would leave the options market-making business. That September, it finished the transfer of its U.S. options market-making operations (the Timber Hill business) to Two Sigma Securities.
What stayed was the far more profitable half. Interactive Brokers’ pre-tax profit margin was 55% in 2016. Last quarter, it was 77%.
And the leaner company continued to grow. Total net revenues rose from $1.4 billion in 2016 to $6.2 billion in 2025, more than four times the revenue, earned at a much higher margin.
Can it happen again?
The parts of the business that produced the decade are still moving. Customer accounts had increased 34% year over year when the company reported second-quarter results in July, and commission revenue increased 30% to $673 million as customers traded more. And the quarter-point rate increase the Federal Reserve announced on Sept. 16 may help a little, as well.
However, two things will not repeat. The move from a 55% pre-tax profit margin to 77% happens once. And the valuation offers no easy help from here, either: The stock already commanded a premium back in 2016, at about 28 times that year’s earnings, and it commands one today, at about 33 times this year’s expected earnings.
In other words, the decade’s gain came almost entirely from the business growing, not from investors paying much more for each dollar of earnings. A second decade like it would need to come from the business alone, too. And growth this fast could always cool. Account openings, after all, can slow rapidly when markets hit a rough stretch.
Ultimately, I don’t believe the next ten years will equal the last ten. But the engine behind that run — more customers bringing more money — has not slowed down. Ten years in, the account count is still accelerating.
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Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Interactive Brokers Group. The Motley Fool recommends the following options: long January 2027 $43.75 calls on Interactive Brokers Group and short January 2027 $46.25 calls on Interactive Brokers Group. The Motley Fool has a disclosure policy.
Interactive Brokers Stock Turned $10,000 Into About $110,000 in a Decade. The Customer Base Grew Even Faster. was originally published by The Motley Fool
Disclaimer : This story is auto aggregated by a computer programme and has not been created or edited by DOWNTHENEWS. Publisher: finance.yahoo.com
