Tradeweb is a pure disruptive play on financial market liquidity

Close up illustration of computer monitor with different bond rates

Key points

  • Tradeweb builds and operates electronic markets for credit, rates, stocks and money markets.
  • The company grew revenue 26.6% year over year in the fourth quarter of 2023.
  • Tradeweb reported record trading volumes of $42.6 trillion in January 2024, averaging $2 trillion in daily trading volume, up 75% year-over-year.
  • 5 stocks we like best about Tradeweb Markets

Tradeweb Markets Inc. NASDAQ: TW is a global developer and operator of electronic markets, particularly for bonds, ETFs and derivatives. It has grown to become one of the leading electronic marketplaces for fixed income trading. Traditionally, bond markets have been mainstream markets run by specialists on a trading floor, but it has transitioned to electronic trading due to its value proposition. Tradeweb has been a force in electrifying or democratizing fixed income trading. The financial services industry company competes with exchanges such as the Intercontinental Exchange Inc. NYSE: ICE AND CME Group Inc. NASDAQ: ECM together with the operator of the electronic bond market platform MarketAxess Holdings Inc. NASDAQ:MKTX.

Global bond markets

Regulated US stock exchanges such as the New York Stock Exchange or NASDAQ are regulated to ensure maximum transparency. In contrast, the global bond market is much less transparent. While government, municipal and corporate bonds have transparency and liquidity, more exotic bonds can be as transparent as IOUs written on the back of a cocktail napkin. These are exchanged by analogue means, including telephone, appointments, email or open protests.

Migration to electronic markets

The value proposition of e-marketplaces cannot be ignored. Speed, convenience, liquidity and transparency are all factors that have moved traditional analog markets towards electronic markets. The days of auction-style trading platforms have faded in the stock, futures and commodity markets. Bond markets are also migrating to electronic exchanges and Tradeweb is a major aggregator and beneficiary of this trend. This is evidenced by the total trading volume reaching $42.6 trillion in January 2024.

Volume growth

Average daily volume in January hit a record $2 trillion, up 75% year-over-year. Tradeweb achieved new records for European government bonds, average daily volume (ADV) for US government bonds, European credit, fully electronic US high grade credit, swaps and swaptions for one year and beyond and global repurchase agreements. Tradeweb also deals with clearing and settlement of trades. Obtain AI-powered insights on MarketBeat.

Accelerate growth

On February 6, 2024, Tradeweb reported fourth-quarter 2023 earnings per share of 64 cents in line with consensus analyst estimates. Revenue increased 26.3% year-over-year to $370 million from $372.49 million. The company increased its dividend to 10 cents per share. Tradeweb expects full-year 2024 adjusted expenses of $755 million to $805 million. Revenue for the LSEG market data contract is expected to be approximately $80 million.

Average daily growth in trading volume

ADV of US government bonds increased by $34 year-over-year to $182.1 billion. The ADV of European government bonds rose 19.1% to $50.1 billion. All-electronic U.S. credit ADV grew 45% to $7.1 billion, while European credit ADV grew 16% to $2.6 billion. Money market, ADV repos grew 31% to $546.2 billion. Mortgage ADV increased 23.9% year over year to $219.5 billion. Swaps and swaptions with a maturity of 1 year or more ADV increased 207.2% year-over-year to $590.8 billion, while total rate derivatives ADV increased 194.2% year-over-year to 922.7 billion dollars.

The U.S. ADV ETF rose 41% year-over-year to $2.6 billion. Rates and credit accounted for 60% and 20% of revenue growth, respectively. Money markets hit a record high thanks to growth in the retail certificate of deposit (CD) franchise and continued organic growth in institutional reporting. The company has integrated its NASDAQ fixed income acquisitions.

Billy Hult, CEO of Tradeweb, commented: “Looking ahead, the client pipeline remains strong as the benefits of our electronic solutions continue to resonate. We believe we are well positioned to capitalize on ETFs’ long-term secular growth story, not just in equities, but across our entire fixed income business.”

Tradeweb Markets analyst ratings and price targets I’m on MarketBeat. Tradeweb Markets peers and competitor stocks can be found with MarketBeat Stock Screener.

tw ascending triangle breakout pattern

Ascending triangle breakout pattern

The daily candlestick chart for TW illustrates an ascending triangle breakout pattern. The ascending lower trendline formed at a low of $86.06 on December 15, 2023. TW rose through resistance at the 50-period daily moving average, which has now turned into support at $94.29. The flat-top upper trend line at $97.18 attempted a breakout on January 18, 2024. Shares rose to a high of $100.24, but fell back to the triangle range after bouncing off 91, $19. As TW approached its peak point, it experienced a new breakout upon its Q4 2023 earnings release, which pushed the stock to retest all-time highs at $102.33. The daily relative strength index (RSI) is rising to test the overbought 70 band. The pullback support levels are at $97.18, $91.19, $86.06, and $78.75.

Before you consider Tradeweb Markets, you’ll want to hear this.

MarketBeat tracks Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and Tradeweb Markets wasn’t on the list.

While Tradeweb Markets currently has a “Moderate Buy” rating among analysts, top-rated analysts believe these five stocks are better buys.

View the five stocks here

7 stocks to buy and hold forever

Click the link below and we’ll send you MarketBeat’s list of seven stocks and why their long-term prospects are very promising.

Get this free report

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *