On April 28, optionsXpress signed an agreement to acquire education service provider Optionetics for $20 million.
Dan O’Neil, executive vice president of futures at optionsXpress, says the acquisition comes down to an increased need for education. “The markets have been incredibly volatile and treacherous and the appetite among individual investors for education has been growing. There is no such thing as too much education. It’s two complementary businesses coming together to offer investors a terrific overall experience,” he says.
Industry insiders and competitors, however, questioned the value of the acquisition. “From a brand perspective, it is a complete mismatch. optionsXpress has spent a lot of time establishing their brand as a reputable source for options education. Optionetics, on the other hand, [relies] on infomercials, aggressive e-mail campaigns and the upselling of paid content and software [to] attract customers. I don’t see how these two brands are going to coexist,” says Mark Longo of The Options Insider, an options educator.
Wade Cooperman, CEO of Trade Monster, says “Customers have access to multiple education firms whether or not Optionetics is purchased by optionsXpress. If you look at it from a straight dollar standpoint, as an acquisition, it’s an awful lot of accounts to make up for $20 million.”
George Ruhana, CEO of OptionsHouse, says “They are trying to attract more active customers with the deal. I like Optionetics, but education does not change the rate structure at optionsXpress.”