Why Charles Schwab Stock Got Socked on Thursday

Charles Schwab (NYSE: SCHW) saw a dip in its share price on Thursday due to events outside the company's control. That's because the top news item for the brokerage was that a major shareholder unloaded some of its Schwab holdings at a discount.

Schwab's stock price sagged in sympathy. By the end of the trading session, the company's shares had lost 0.5% of their value. That compared favorably, but only just, with the S&P 500 index's 0.8% decline on the day.

Brokerage for sale, cheap

Within its fiscal third quarter of fiscal 2024 earnings report, Canada-based Toronto-Dominion Bank (NYSE: TD) divulged that it sold 40.5 million shares of Schwab's common stock. It earned roughly $2.5 billion on the sale, putting the average share price at $61.73. That's notably under the brokerage's most recent closing price of $64.27 per share.

The move was part of an attempt to shore up the lender's finances. For the quarter, it booked a 2.6 billion Canadian dollar ($1.9 billion) provision to pay fines that are expected to be handed down by the U.S. Department of Justice (DoJ). That agency is currently in the midst of a probe into the bank 's anti-money laundering (AML) efforts.

The share sale reduces Toronto-Dominion's stake in Schwab to slightly over 10%. Before the divestment, that figure stood at 12.3%.

Already not in the market's good graces

Although extenuating circumstances were the driving force behind Toronto-Dominion's divestment, investors have generally been cold on Schwab lately. Earlier this summer, the company said it was slimming down its banking operations, and some market players weren't too happy about that strategy. Meanwhile, its second-quarter earnings featured a headline net income number that barely budged from the year-ago figure.

Charles Schwab is an advertising partner of The Ascent, a Motley Fool company. Eric Volkman has positions in Charles Schwab. The Motley Fool has positions in and recommends Charles Schwab. The Motley Fool recommends the following options: short September 2024 $77.50 calls on Charles Schwab. The Motley Fool has a disclosure policy .