Interactive Brokers Group, Inc. (IBKR) stock intrinsic value fair value estimate & owner earnings analysis

Interactive Brokers runs a highly automated electronic brokerage serving about 4.4 million cleared customer accounts in more than 200 countries and territories. It earns money three ways. Net interest income is 57% of 2025 net revenue: it lends against customer margin balances and earns on segregated cash and securities. Commissions are about 35%. Fees and other items make up the rest. Pre-tax margins are about 77%, because the platform is built and operated in-house. The public company, IBG Inc., owns only about 26% of the operating firm, IBG LLC. The founders' holding company owns the other 74%. We value one Class A share as its claim on the whole business. That claim carries the corporate tax that IBG Inc. pays only on its own portion. The result is close to reported Class A earnings per share: about $2.25 of owner earnings against $2.19 of adjusted earnings per share in 2025. All per-share figures are adjusted for the four-for-one split in June 2025. How we measured earnings. Brokerage cash flow swings by tens of billions of dollars with customer deposits, margin loans and securities lending. Those swings have nothing to do with profit, so we removed them. What is left is net income plus non-cash items, less stock compensation (a real cost to owners) and the small portion of capital spending needed just to stay in business. That reconciles to reported cash flow exactly each year. Owner earnings per Class A share were about $0.40 in 2016, $0.44 in 2017, $0.61 in 2018, $0.60 in 2019, $0.62 in 2020, $0.88 in 2021, $0.97 in 2022, $1.46 in 2023, $1.81 in 2024 and $2.25 in 2025. The 2016 to 2022 per-share figures rest on approximate unit counts and tax allocations. Starting point. We use $1.81, the median of 2023 to 2025. That window starts after the customer base more than doubled, and it spans a Federal Reserve rate range from 5.3% down to 3.5% to 3.75%. It deliberately sits below 2025's $2.25, because part of that level came from high interest rates. Owner earnings grew 24.6% in 2025, and our first-year assumption of 15% is below that. Nothing in the filings suggests growth will reverse, and first-half 2026 net revenue (up 22%) and net income (up 27%) both rose despite lower rates. We do not use guidance or forecasts. Growth we credit. Accounts grew from about 690 thousand (early 2020) to 2.09 million (early 2023) to 4.4 million (early 2026). That includes 2022's market downturn. It is funded from internal cash, and capital spending is only about 1% of revenue. We credit this as a repeatable process at a pace well below the record, tapering from 15% to 1% over ten years in the base case. We do not credit new products, new markets, higher rates or any market recovery. Base case, about $40.5 per share. Growth tapers as described above and earning power then holds flat for a further 15 years. The evidence is a business that has run profitably since 1977 with industry-low costs. We assume nothing beyond year 25. Bear case, about $14.4 per share. Net interest income is the exposed piece. When rates were near zero in 2021, owner earnings were $0.88 per share with a far smaller customer base. We assume rates fall enough to cut net interest income roughly in half, which lowers earnings about 37% to roughly $1.15 per share. The size of that cut is our own inference from the 2021 results and 2025 volumes, since the filing does not disclose a rate-sensitivity figure. Growth is only 4% fading to zero by year 5, and earnings last just 10 more years after year 10. The firm carries no meaningful corporate debt, so leverage is not a bear-case driver. Its main risks are market-structure and regulatory shifts, and rate exposure. Bull case, about $72.1 per share. The 2025 earnings level of $2.25 holds. Account growth continues near its demonstrated pace (20% fading to 2% over ten years), and earnings then stay flat for 20 years. Margin-of-safety price. The margin-of-safety price is about $24.5, roughly 40% below the base case. That margin is wide because so much profit depends on interest rates and trading volume. What could make this wrong. A sustained slide in rates, faster than in our bear case, would cut into the largest revenue line. A prolonged drop in trading activity would hit commissions. Regulation of margin lending or securities lending would also matter. The structure of the holding company and the unit count are approximated in our per-share figures; this does not change the direction of the result.