MF Global’s stock is nosediving following yesterday’s Moody’s downgrade of the firm and a weak earnings report released today.
Shares for the derivatives brokerage are down 38% today; at one point earlier this morning, prices had plunged over 40%. Taking today’s fall into consideration, MF Global is down around 74% YTD.
Exposure to European debt was one of the key reasons for the Moody’s downgrade, which brought MF Global’s debt rating to Baa3 – that’s just one level away from junk-bond grade. Moody’s will also continue to review the company for another downgrade. Unease concerning the firm’s Europe exposure has been brewing since August, when regulators asked the company to amass more capital against its European debt liabilities.
MF Global decided to release their quarterly earnings report today in response to the downgrade – it was originally scheduled for Thursday, the Wall Street Journal reported.
But the earnings results revealed a drop in net revenue – the company had around $205 million this past quarter, a 14% drop from $240 million this time a year ago. Total revenue fell to $499 million, down 2% year-over-year from $511 million. MF Global had an adjusted net loss of $0.09 per share, compared to the estimated gain of $0.05 per share, according to Reuters.
As for Europe, the company has a net-long position on $6.3 billion of debt from Italy, Ireland, Spain, Portugal and Belgium.
Fun fact: MF Global’s current head is Jon Corzine, a former Goldman Sachs CEO and governor of New Jersey from 2006 to 2010.