Interactive Brokers
IBKR
$91.68
+1.27%
Interactive Brokers is a global automated electronic brokerage and market maker, providing low-cost trading and margin lending to retail and institutional clients across 170 exchanges and 29 currencies. It distinguishes itself through best-in-class order execution, ultra-low margin rates, and a sophisticated client base that includes hedge funds and introducing brokers, which together generate about 45% of commissions. The current investor narrative centers on accelerating growth driven by a surge in daily average revenue trades (DARTs), which rose 53% year-over-year in June 2026, and the recent elimination of the Pattern Day Trader rule, which is expected to boost retail trading volumes. Additionally, the company's global expansion and record customer equity of nearly $780 billion underscore its competitive momentum.…
IBKR
Interactive Brokers
$91.68
Related headlines
Investment Opinion: Should I buy IBKR Today?
Rating: Buy. IBKR offers a rare combination of accelerating growth, high margins, and a pristine balance sheet, making it a compelling long-term holding. The consensus analyst rating is Buy with an average target of $98.58, implying 8.9% upside. Supporting evidence: Revenue grew 16.9% YoY, gross margin expanded to 96.1%, free cash flow yield is 15.1%, and ROE of 18.3% is well above industry average. The PEG ratio of 1.05x suggests the stock is fairly valued relative to its growth rate. Risks: A slowdown in DARTs growth, interest rate cuts, or a broad market downturn could pressure the stock. If revenue growth decelerates below 10%, the premium P/E may contract, warranting a downgrade to Hold. Conversely, sustained DARTs growth above 30% could support further upside. Overall, IBKR is fairly valued relative to its growth and profitability, but not a deep value.
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IBKR 12-Month Price Forecast
IBKR's strong fundamentals and positive catalysts support a bullish stance, but the premium valuation and market sensitivity warrant medium confidence. The base case of 12-15% revenue growth and stable margins is most likely, with the stock trading near the analyst average target. Key factors to watch are DARTs trends and interest rate decisions. If DARTs growth sustains above 30%, the bull case becomes more probable; if a recession hits, the bear case could materialize. Overall, the risk/reward is favorable given the company's competitive advantages and financial strength.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Interactive Brokers's 12-month outlook, with a consensus price target around $99.99 and implied upside of +9.1% versus the current price.
Average Target
$99.99
0 analysts
Implied Upside
+9.1%
vs. current price
Analyst Count
—
covering this stock
Price Range
$64 - $118
Analyst target range
Interactive Brokers is covered by 12 analysts, with a consensus recommendation of 'Buy' (mean rating 1.75 on a 1-5 scale, where 1 is Strong Buy). The average target price is $98.58, implying approximately 8.9% upside from the current price of $90.53. The distribution leans bullish, with no sell ratings and a majority of analysts maintaining Overweight or Buy ratings. Recent actions from B of A Securities, Barclays, Piper Sandler, BMO Capital, Goldman Sachs, and Jefferies have all been positive, with no downgrades in the past six months, indicating strong institutional conviction. The target price range spans from a low of $64.00 to a high of $118.00, representing a wide spread of $54, which signals high uncertainty about the stock's future trajectory. The high target of $118 assumes continued acceleration in trading volumes, successful international expansion, and margin expansion, while the low target of $64 prices in a potential slowdown in revenue growth or a market downturn. The wide range suggests that while the consensus is bullish, there is significant dispersion in outcomes, and investors should monitor catalysts like DARTs trends and interest rate movements closely.
Bulls vs Bears: IBKR Investment Factors
Interactive Brokers presents a compelling growth story with accelerating revenue, expanding margins, and a fortress balance sheet. The bull case is supported by strong trading volume momentum, regulatory tailwinds from the PDT rule elimination, and a bullish analyst consensus. However, the stock trades at a premium valuation (28.8x P/E vs. 22x industry) and is sensitive to market volatility (beta 1.33). The single most important tension is whether the surge in DARTs and revenue growth can sustain, as any slowdown could trigger multiple compression. Currently, the bull case has stronger evidence given the robust fundamental trends and positive catalysts, but investors should monitor trading volume trends closely.
Bullish
- Accelerating Revenue Growth: Revenue grew 16.9% YoY in Q1 2026 to $2.70B, accelerating from 6.9% YoY in Q2 2025. This is driven by a 53% surge in DARTs, indicating strong trading activity momentum.
- High and Expanding Margins: Gross margin reached 96.1% in Q1 2026, up from 88.1% a year ago, while operating margin expanded to 87.3% from 83.9%. This reflects the scalability of the brokerage model as revenue outpaces cost growth.
- Massive Free Cash Flow Generation: Trailing twelve-month free cash flow is $16.76B, yielding 15.1% of market cap. This provides ample flexibility for dividends, buybacks, and reinvestment, reducing financial risk.
- Strong Balance Sheet with Minimal Debt: Debt-to-equity ratio is just 0.0035, and current ratio is 1.13, indicating exceptional liquidity and low leverage. This positions the company well to withstand market downturns.
Bearish
- Premium Valuation vs. Peers: Trailing P/E of 28.8x is 31% above the industry average of 22.0x. While justified by growth, any deceleration could lead to multiple compression and downside.
- Revenue Miss in Q1 2026: Despite strong operational growth, Q1 revenue of $2.70B fell short of Wall Street expectations, causing a stock decline. This highlights sensitivity to quarterly estimates.
- High Beta and Market Sensitivity: Beta of 1.33 means the stock is 33% more volatile than the market. In a broad market downturn, IBKR could decline more than the S&P 500, amplifying losses.
- Dependence on Trading Volume: Commissions are the largest revenue segment, and DARTs surged 53% YoY. A normalization in trading activity or a bear market could significantly reduce revenue growth.
IBKR Technical Analysis
Interactive Brokers is in a strong long-term uptrend, with the stock up 52.3% over the past year, significantly outperforming the S&P 500's 18.4% gain. The current price of $90.53 sits at 82.5% of its 52-week range ($58.95–$97.84), indicating the stock is trading near the upper end of its range, reflecting sustained bullish momentum but also potential overextension. The 1-year relative strength versus the S&P 500 is +34.0%, confirming broad-based outperformance. Over the past three months, the stock has gained 10.8%, and over six months 23.4%, both well ahead of the S&P 500's 4.7% and 7.5% gains, respectively. However, the 1-month change of -4.8% contrasts with the S&P 500's +0.3%, signaling a short-term pullback or profit-taking after the stock hit a 52-week high of $97.84 on July 15. This divergence could indicate a temporary consolidation phase rather than a trend reversal, given the strong underlying fundamentals and positive catalysts. The 52-week low of $58.95 provides a clear support level, while the 52-week high of $97.84 acts as resistance. A breakout above $97.84 would signal a continuation of the uptrend, potentially targeting the $100+ level, while a breakdown below $90 could test the $85 area. The stock's beta of 1.33 indicates it is 33% more volatile than the market, meaning it amplifies market moves and requires careful position sizing.
Beta
1.33
1.33x market volatility
Max Drawdown
-18.8%
Largest decline past year
52-Week Range
$59-$98
Price range past year
Annual Return
+43.1%
Cumulative gain past year
| Period | IBKR Return | S&P 500 |
|---|---|---|
| 1m | -4.5% | -0.6% |
| 3m | +15.1% | +5.4% |
| 6m | +20.9% | +8.3% |
| 1y | +43.1% | +18.3% |
| ytd | +36.4% | +8.8% |
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IBKR Fundamental Analysis
Interactive Brokers' revenue trajectory is robustly growing, with Q1 2026 revenue of $2.70 billion, up 16.9% year-over-year from $2.31 billion in Q1 2025. This marks an acceleration from the 6.9% YoY growth in Q2 2025 and the 14.3% growth in Q4 2025, driven by higher commission income (up to $613 million in Q1 2026 from $462 million in Q1 2025) and strong net interest income. The company's revenue segments show commissions as the largest contributor, followed by risk exposure fees and market data fees, with the surge in DARTs (53% YoY) underpinning the growth. The multi-quarter trend is clearly accelerating, reinforcing the investment case of a cyclical growth story tied to trading volumes and rising interest rates. Profitability is strong and improving: net income for Q1 2026 was $267 million, up from $213 million in Q1 2025, representing a 25.4% increase. Gross margin remains exceptionally high at 96.1% in Q1 2026, up from 88.1% in Q1 2025, reflecting the scalability of the brokerage model. Operating margin also expanded to 87.3% from 83.9% a year ago, driven by operating leverage as revenue grows faster than expenses. The net margin of 9.9% is healthy for a financial services firm, and the trend is positive, with net income growing sequentially from $224 million in Q2 2025 to $267 million in Q1 2026. The balance sheet is exceptionally strong: Interactive Brokers has minimal debt, with a debt-to-equity ratio of just 0.0035, and a current ratio of 1.13, indicating ample liquidity. Free cash flow for the trailing twelve months is a massive $16.76 billion, translating to a free cash flow yield of 15.1% based on the current market cap. Return on equity (ROE) stands at 18.3%, well above the industry average, reflecting efficient capital use. The company generates far more cash than it needs to fund operations, reducing financial risk and providing flexibility for dividends and share buybacks.
Quarterly Revenue
$2.7B
2026-03
Revenue YoY Growth
+16.9%
YoY Comparison
Gross Margin
96.1%
Latest Quarter
Free Cash Flow
$16.8B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is IBKR Overvalued?
Since net income is positive, the primary valuation metric is the P/E ratio. The trailing P/E is 28.8x, while the forward P/E is 30.2x, implying the market expects earnings to grow modestly. The gap between trailing and forward P/E is narrow, suggesting stable earnings expectations. Compared to the industry average P/E of 22.0x (estimated from sector data), Interactive Brokers trades at a 31% premium, reflecting its superior growth, high margins, and strong competitive position. The premium is justified by the company's revenue growth acceleration (16.9% YoY) and ROE of 18.3%, which are well above industry medians. Historically, the stock's trailing P/E has ranged from 13.8x (Q4 2023) to 35.4x (Q3 2021). The current 28.8x is near the middle of this range, suggesting it is not excessively overvalued relative to its own history. However, it is above the 5-year median of approximately 22x, indicating the market is pricing in continued strong performance. The PEG ratio of 1.05x suggests the stock is fairly valued relative to its growth rate, as a PEG near 1.0 is considered reasonable.
PE
28.8x
Latest Quarter
vs. Historical
High-End
5-Year PE Range 14x~35x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
11.7x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: IBKR's revenue is heavily tied to trading volumes and interest income. A 53% YoY surge in DARTs may not be sustainable, and a normalization could slow revenue growth. The company's net margin of 9.9% is healthy but sensitive to interest rate changes, as net interest income is a key component. With a debt-to-equity ratio of 0.0035, financial leverage is minimal, but the high free cash flow yield of 15.1% could be impacted if trading activity declines. Market & Competitive Risks: The stock's beta of 1.33 implies higher volatility, and its premium P/E of 28.8x (vs. industry 22.0x) leaves it vulnerable to valuation compression if growth decelerates. The elimination of the PDT rule is a positive catalyst, but competitors like Robinhood and Webull also benefit, potentially increasing competition for retail traders. Regulatory changes or a shift in market structure could also impact IBKR's low-cost advantage. Worst-Case Scenario: A sustained bear market reducing trading volumes, combined with interest rate cuts compressing net interest income, could cause revenue to decline. In such a scenario, the stock could fall to its 52-week low of $58.95, representing a 35% decline from the current price of $90.53. This aligns with the analyst low target of $64, implying a potential loss of up to 29%.
FAQ
The key risks are: 1) Trading volume normalization: DARTs surged 53% YoY, and a slowdown could reduce commission revenue significantly. 2) Valuation compression: The P/E of 28.8x is above the industry average, and any growth deceleration could lead to multiple contraction. 3) Market sensitivity: Beta of 1.33 means the stock amplifies market moves, so a bear market could cause outsized losses. 4) Interest rate risk: Net interest income is a major profit driver; rate cuts could compress margins. The most severe risk is a combination of a bear market and rate cuts, which could drive the stock to the 52-week low of $58.95 (35% downside).
The 12-month forecast is moderately bullish, with a base case target of $90-100 (50% probability) assuming DARTs growth moderates to 20-30% and revenue grows 12-15%. The bull case (30% probability) targets $100-118, driven by sustained high trading volumes and margin expansion. The bear case (20% probability) sees the stock falling to $64-80 if a recession hits. The most likely scenario is the base case, with the stock trading near the analyst average of $98.58. Key assumptions include stable interest rates and continued retail trading activity.
IBKR is fairly valued relative to its growth rate, with a PEG ratio of 1.05x, but it trades at a premium to the industry. The trailing P/E of 28.8x is 31% above the industry average of 22.0x, reflecting the market's expectation of continued strong performance. Historically, the stock's P/E has ranged from 13.8x to 35.4x, and the current level is near the middle, suggesting it is not excessively overvalued. The premium is justified by superior revenue growth (16.9% YoY vs. industry ~8%), high ROE (18.3%), and massive free cash flow generation. Overall, the market is pricing in sustained growth, but not at an unreasonable level.
IBKR is a good buy for growth-oriented investors with a moderate risk tolerance. The stock offers a compelling risk/reward with 8.9% upside to the average analyst target of $98.58, supported by 16.9% revenue growth, 96.1% gross margins, and a 15.1% free cash flow yield. However, the premium P/E of 28.8x (31% above industry) and beta of 1.33 mean it is not a low-risk investment. The biggest downside risk is a sustained decline in trading volumes, which could push the stock to $64 (29% downside). For long-term investors who believe in the secular growth of online trading and IBKR's competitive advantages, it is a solid buy at current levels.
IBKR is better suited for long-term investment (3-5 years) due to its strong competitive position, high margins, and secular growth trends in online trading. The stock's beta of 1.33 and recent 1-month decline of -4.8% indicate short-term volatility, making it less ideal for short-term trading. The dividend yield is low at 0.47%, so income-focused investors may look elsewhere. For long-term investors, the company's ability to generate 15.1% free cash flow yield and reinvest in growth provides a solid foundation. A minimum holding period of 3 years is recommended to ride out market cycles and benefit from compounding.