To The Moon

Basically tiger brokers earn money from (I) commission from trading as well as settlement fees, (ii) services rendered in connection with IPO, (iii) services from ESOS, (iv) margin financing income and (v) income from excess funds residing in its accounts. 

1Q2021 saw the GameStop saga where robinhood and other trading platform like etoro recorded a big jump in account opening. Isn't it a coincide that tiger's ceo expects that around 340,000 new funded accounts will be added to tiger existing 250,000 funded accounts. This is like 150 percent increase.

Logically speaking, given my past financial background, the assumption would be the same 45,000 account opening for 2q to 4q2021 to be conservative. This leaves around 200,000 new accounts to be opened in 1q2021. Didn't this just coincided with the GameStop saga that sees robinhood, etoro recording big jump in account opening. The difference here is that average funded account at tiger is around 50,000 dollars from what I recalled. If 200,000 new accounts funded at 50,000 dollars per account, this would translate to another 10 billion of funds to tiger's customer accounts.

Add this to the existing 15 billion dollars of funds, this represents an increase of around 60 percent of increase in funds. With trading value of 65billion usd recorded in 4q2020, simplistically assuming a linear increase in trading value will translate to more than 100 billion of trading value. While I do not know the exact settlement fee rate, the increase capability of settling the US traders would provide another positive catalyst to push up the profit in 1q. Higher trading value plus earning more in settlement fees plus the growing platform of services fee from ESOS and IPO plus higher income from margin financing. Furthermore, it is likely to have more interest income for funds sitting in the banks due to higher customer deposits.

All these bode well for tiger. With a profit of around 10 million in 4q2020, the above should easily push q1 profit to at least 20 million. I will not be surprised to see the profit number hitting 27 million but again, this is based on my hunches. Take it with a pinch of salt. Remember this is not an investment advice but rather a channel for me to air my thoughts. I am expecting tiger to make at least 80 to 100 million in 2021.

Given its fast earning growth potential, a higher pe should be accorded. Furthermore online trading will only become more and more prevalent. With a younger group of investors in tiger platform plus familiarity of tech as the middle age adopts tech as part of life, online trading platform should see an explosive growth rate for the years to come. Yes, I know people are saying that tiger has a high pe but remember that tesla pe is 1200. Well though they are of different sector, the growth in the respective industries do warrant a look into the growth potential of companies within the respective subsectors.

Remember this does not and should not be construed as an investment advice. In investing and trading, there is no guarantee of making profit. Please control risks. My lunchtime writing. Yes, I love to write and may start writing more.