Charles Schwab ( SCHW -0.47% ) experienced a drop in its share price on Thursday because of factors beyond the company’s control. This occurred as the main news for the brokerage was that a significant shareholder sold a portion of its Schwab shares at a reduced price.
Schwab’s stock price also dropped. By the close of the trading session, the company’s shares had decreased by 0.5% in value. This was slightly better, but only marginally, than the S&P 500 the index decreased by 0.8% for the day.
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In its earnings report for the third quarter of fiscal year 2024, the Canadian company TD Bank ( TD -2.19% ) revealed that it sold 40.5 million shares of Schwab’s common stock, earning approximately $2.5 billion from the sale. This places the average share price at $61.73, which is notably lower than the brokerage’s most recent closing price of $64.27 per share.
The action was taken in an effort to strengthen the bank’s financial situation. During the quarter, it set aside a provision of 2.6 billion Canadian dollars (equivalent to $1.9 billion) to cover anticipated fines from the U.S. Department of Justice (DoJ). The department is currently conducting an investigation into the bank the initiatives to prevent money laundering (AML).
By selling some of its shares, Toronto-Dominion has decreased its ownership in Schwab to just above 10%. Prior to this sale, their stake was at 12.3%.
Already not favored by the market
Despite the fact that extenuating circumstances were the main reason behind Toronto-Dominion’s decision to sell off its stake, investors have not been very enthusiastic about Schwab recently. Earlier this summer, the company announced it would be reducing its banking activities, a move that did not sit well with some market participants. At the same time, its earnings for the second quarter highlighted a headline net income figure that showed little change compared to the number from the previous year.
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