Knight Capital’s Chart Looks Great Until

Aug 5, 2012
J. Webster
Comments Off on Knight Capital’s Chart Looks Great Until

Knight Capital’s stock has hovered around the $12-$14 range for the past few years until last Thursday when an algorithm or some type of software they were using just went mad crazy.

“Electronic-trading glitches in its system that caused price swings in dozens of stocks this week are likely to cost the brokerage firm $440 million. Shares sank 57% to $3 in premarket trading.”

Glitches in their system? That’s a serious glitch if your company can disappear based on a “glitch”.

The stock who had a nice trading range in the teens for years then went nearly up in smoke, going down as low as $2.27 a share. There was some worry that the company would collapse entirely, disappear in just two days time.

However, it now looks like they will survive, barely, as TD Ameritrade and Scottrade said they would resume routing client trades through Knight Capital. But what a nightmare of a run for a company. It’s like a Lehman Brothers moment crunched down into 48 hours with no body to bail them out. I don’t think that’s the type of stock I want to own.

If there’s a risk the company can not exist in a matter of two days time, I’ll stay away. I think I’ll pick from one of the thousand other stocks out there to buy.

Related Posts Plugin for WordPress, Blogger...

Comments are closed.