The latest earnings report from Knight Capital Group shows that the earnings of the company has decreased by 84% as the trading has slowed down and the swings experienced by stocks narrowed down. The 4th quarter profit for the company in 2012 was of $6.5 million, making cost of its each share a cent. Incidentally, only a year ago, the per share cost was at 43 cents and the overall final quarter profit of 2011 was $40.2 million. If certain items such as legal fees related to the takeover or the investment withdrawn are excluded, the earnings however go up to 5 cents per share. This exceeds the initial estimates made by analysts of 3 cents per share price. Incidentally, a few weeks ago, the company agreed to be acquired by Getco LLC.
The overall trading volume for Knight shares have plunged by 18% in 2012. Apart from that, the volatility has also gone down to its lowest level in last 5 years. Incidentally, Chicago Board Options Exchange Volatility Index measures the volatility of different companies listed in benchmark gauge of US stock exchange, Standard & Poor’s 500 Index. The overall economic reports and corporate earnings of US companies experienced improvement and as a result, Knight may see higher price swings. Analysts believe that Knight can actually benefit with every single transaction as the market making segments make almost half of the company’s revenues.
In the New Year, Knight Shares have experienced a gain of 5%, however, on today, it declined by 0.1%. Each share is currently priced at $3.69. Getco’s $1.4 billion worth proposal to acquire Knight was accepted by the latter on last month. Incidentally, Knight experienced a huge loss of $450 million in last August as the computers used by the company to make trades started making erroneous orders.
Thomas Joyce, the Chief Executive Officer of Knight stated that the last year brought so many troubles for the company, causing low earnings. However, he added that the company is looking forward to a bright future in 2013. He also declared that Knight has plans to combine the electronic institutional equity sales and full service teams. This new group will be led by the Head of Institutional Equities, Joseph Mazzella and Head of International, Albert Maasland. On the other hand, the company will not continue the correspondent clearing business.