Charles Schwab shares loses 4% 📉 Company wants to cut costs

Shares of Charles Schwab (SCHW.US) are losing nearly 4% today and deepening the sell-off despite Morningstar raising its recommendation to $80 from $70 just a few days ago. Documents it filed with the SEC indicate that the company plans to save money by cutting jobs and selling off offices. The company said the move was related to its adjusting operations to integrate with the $26 billion brokerage firm it acquired in 2020, TD Ameritrade. 

• The market is also assessing the liquidity risk to Charles Schwab's business, the company reported, for a more expensive source of funding from the Federal Reserve Bank to supplement cash flow;
• Earlier this year, the leading U.S. brokerage reported that it was looking to raise up to $2.5 billion through a debt offering;
• The company wants to re-evaluate its business model and reduce FTEs, especially those not directly or indirectly related to customer service and experience. 
• The company is also in the process of evaluating its exposure to the real estate market and expects to achieve $500 million in annual savings. Most of the costs associated with the FTE reductions will be incurred by the company in the second half of this year. The cost reduction program will last until 2024 

Looking at the share price, we see that the stock respected resistance at the SMA200 (red line) and failed to rise above it. As a result, Charles Schwab shares are now testing the levels of $56 where the SMA100 runs, but a further decline is not ruled out, to $52.3 where the 61.8 Fibonacci retracement of the 2020 upward wave is located. 

Source: xStation5