Interactive Brokers started as Thomas Peterffy's automated market maker in 1977. By Q3 2025, it's a $30B S&P 500 powerhouse with $757.5B in customer equity, 4.13M accounts (up 32% YoY), and 79% pretax margins. The October 16 earnings beat: $1.65B revenue (+21% YoY), $0.57 EPS vs. $0.54 expected. Yet it trades at a 50% discount to Robinhood on revenue multiples.
The 81-year-old founder owns 67% of shares. Analysts are split 5 BUY, 5 HOLD—with no one calling it a sell.
Why This Matters
From niche trading shop to S&P 500 — 123% surge in 2025 validates decades of tech investment
From rate play to diversified machine — Commission income +23%, proving resilience beyond interest rates
From discount valuation to acquisition target? — Founder's age + 67% ownership = potential premium
From $32 low to $73 high — Is this undervalued infrastructure or overpriced momentum?
The Battle: Bulls vs. Bears
THE BULL CASE
David Trainer (New Constructs — Strong Buy): "79% pretax margins would make software companies jealous. IBKR's sophisticated clients trade more in downturns, not less. Tech moat + fortress balance sheet + 30% upside even after the run."
Josh Brown (CNBC — Bullish): "Peterffy is 81, owns 67%, and crypto players need stock market infrastructure. This is an obvious acquisition target. Even without that, fundamentals alone push this into the $70s. Trading at 50% discount to Robinhood makes zero sense."
Symeon Mavroudis (Portfolio Manager — Strong Buy): "$19.5B equity, net interest income +21% to $967M, securities lending strengthening. S&P 500 inclusion brings passive flows. This capital-efficient machine can't be replicated."
Cedric Pfort (Finance Analyst — Buy): "111,900 organic accounts added in September after the Futu withdrawal. Customer equity jumped $44B month-over-month. These are high-quality clients with larger balances—not day traders. The flywheel is accelerating."
Albert Anthony (Equities Research — Buy): "Just launched AI-powered 'Ask IBKR' tool. Execution at 1.8 basis points—tightest in the industry. Robinhood sells order flow; IBKR wins by being better. Wall Street consensus: Strong Buy, targets $76-$91."
THE BEAR CASE
Harrison Schwartz (Analyst — Hold): "33x forward earnings for a cyclical business. Futu withdrew 38,800 accounts and $413M in September—what if more large clients leave? Rate cuts pressure the largest profit center.IBKR makes massive profits from interest rate spreads. Priced for perfection."
Blake Winiecki (Macro Analyst — Hold): "79% margins have nowhere to go but down. Commission growth is volume-dependent—what happens when DARTs normalize? Not selling, but not buying at all-time highs either."
The Alpha Analyst (Former Barclays VP — Hold): "Acquisition thesis is speculative. Trading at 30.82x forward P/E vs. Schwab at 19x. Volumes stagnate if volatility declines. Need a correction to $55-60 first."
Jia Ming Eow (Growth Investor — Hold): "IBKR targets sophisticated traders—that's niche vs. Robinhood's 24M accounts. Platform intimidates beginners. Valuation assumes 30%+ growth forever. Where's the TAM without dumbing down the platform?"
Motti Sapir (15 Years Experience — Hold): "After running from $32 to $73, we're at all-time highs. Fundamentals are strong but valuation matters. Wait for a 15-20% pullback to $55-58. Patience beats FOMO."
KEY CONCERNS:
S&P Midcap 400 removal triggered forced selling (settled late October)
Implied volatility 81st percentile—options pricing ±5.8% moves
Interest rate cuts threaten net interest income
Founder succession risk (Peterffy, 81)
IBKR vs. Robinhood: Quick Comparison
Category | IBKR | Robinhood |
|---|---|---|
Client Base | Sophisticated/institutional, 80% international | Retail, U.S.-focused, 24M+ accounts |
Valuation | 33x forward P/E, 50% discount on revenue multiples | 50-60x forward P/E |
Margins | 79% pretax, highly automated | PFOF-dependent, lower margins |
Growth | 32% accounts, 40% equity YoY | Faster accounts, smaller balances |
Edge | Execution quality (1.8 bps), 160+ markets | Mobile UX, brand awareness |
Key Numbers
Q3 2025 Results:
Revenue: $1.65B (+21% YoY), beat by 10%
EPS: $0.57 adjusted vs. $0.54 estimate
Accounts: 4.13M (+32% YoY)
Customer equity: $757.5B (+40% YoY)
DARTs: 3.62M (+34% YoY)
Pretax margin: 79%
Net interest income: $967M (+21%)
Stock:
Current: $68-71 | 52-week: $32.82-$73.35
YTD: +123%
P/E: 33x forward
Analyst targets: $76 consensus (range $52-$103)
Dividend: $0.08/quarter (0.47% yield)
Catalysts: S&P 500 passive flows, AI tools, Q4 earnings (Jan 19, 2026), acquisition potential
Risks: Rate cuts, Futu withdrawal precedent, 33x valuation, founder succession, index selling pressure
IBKR is a tech company disguised as a brokerage—79% margins prove it. The bull case is strong: undervalued vs. Robinhood, acquisition potential (81-year-old founder, 67% ownership), and best-in-class execution. Bears are right too: 33x forward earnings for a cyclical business, rate headwinds, and all-time high valuations after a 123% run.
For momentum traders: Watch $65 support. Break = distribution. Upside target $76-80. Use tight stops.
For value investors: Wait for $55-60. Build positions on weakness over 3-5 years.
For growth investors: Dollar-cost average at current levels if you believe in the 5+ year thesis. Max 5% allocation—founder concentration risk.
For holders with profits: Trim 20-30% here. Set buy limits at $58-62. Rebalance on strength.
This is either the most undervalued fintech infrastructure play—or an overhyped broker at peak multiples. Tech moat is real, margins are elite, growth is tangible. But valuation is rich, founder is aging, macro is shifting. Trade accordingly.