Ally Financial Acquires TradeKing: What's Next in the Cards?

Shutterstock photo

Ally Financial Inc. ALLY closed the deal to acquire TradeKing Group Inc., a digital wealth management firm. The transaction cost the company approximately $275 million.

TradeKing offers an online broker /dealer platform, educational content and social collaboration channels, and a digital portfolio management platform. Hence, the deal will not only help Ally Financial to improve its product offering but is also in sync with the recent trend of digitizing financial operations.

Ally Financial CEO Jeffrey Brown said, "The completion of this transaction marks a key step on Ally's journey to create a premier digital financial services company with a broader set of offerings to meet our customers' needs."

TradeKing will remain based in Fort Lauderdale, FL and operate as a wholly-owned subsidiary of Ally Financial. TradeKing has nearly $4.5 billion in client assets, including nearly $1.1 billion of cash and cash investments, 260,000 funded accounts and 20,000 daily average revenue trades.

In April, at the time of announcement of the transaction, Ally Financial stated that it expects the deal to have a minimal impact on 2016 and 2017 results and be accretive in 2018. Also, the company anticipated future growth potential "as consumer preferences drive a greater shift toward digital wealth management services."

Brown further said, "Brokerage and wealth management are a natural fit for Ally's customer base, and the timing is right as more consumers gravitate toward digital wealth management services. We believe this transaction will drive meaningful value over time."

Notably, in Feb 2016, Ally Financial had revealed its plan to expand into wealth management, mortgages and credit card operations.

Ally Financial is gradually diversifying its revenue streams and the acquisition of TradeKing is a step in that direction. Additionally, the company plans to launch a fully integrated consumer platform by early 2017, under which its online brokerage and wealth management services will be offered. Further, it also intends to introduce limited direct mortgage originations in late 2016.

Therefore, these changes are likely to help Ally Financial in diversifying its operations and boost top-line growth.

Currently, Ally Financial carries a Zacks Rank #3 (Hold). Some better-ranked finance stocks include Navient Corporation NAVI , Cash America International, Inc. CSH and Enova International, Inc. ENVA . All these stocks hold a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days . Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

ENOVA INTL INC (ENVA): Free Stock Analysis Report

NAVIENT CORP (NAVI): Free Stock Analysis Report

ALLY FINANCIAL (ALLY): Free Stock Analysis Report

CASH AM INTL (CSH): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Business , Investing , Stocks
Referenced Symbols: ENVA , NAVI , ALLY ,

More from Zacks.com




Equity Research

Research Brokers before you trade

Want to trade FX?