MF Global Holding’s shares are tanking again today.
So far, the company’s stock is down about 33%, trading at around $1.25. Shares traded as low as $1.09 earlier today, down nearly 44%. The company’s shares may soon be headed towards penny stock status.
The Wall Street Journal has just reported that the company has hired Evercore Partners and another bank to explore strategic alternatives. That means the company may be considering selling itself to another company or a merger.
Typically, share prices of a company looking to be purchased will go up after such an announcement, because the offer price for the company is expected to be at a premium to what the stock is currently trading at. (So people will buy expecting a further price surge following a deal announcement.) But MF Global prices tanked further after the Journal article was published at 10:18 a.m – it hit the low of $1.09 around 10:44 a.m. That’s not a good sign. Basically, the market doesn’t thinks MF Global is worth that much.
Yesterday, the stock closed down 48% at $1.86 per share. Taking today’s fall into consideration, the company is down 84% YTD.
So much for MF Global Head Jon Corzine attempting to make the company a “mini-Goldman Sachs.” Corzine, an ex-Goldman CEO and former New Jersey governor, joined the MF Global in 2010 with much fanfare and shook up the firm with restructuring and layoffs.
Shares for the futures brokerage began falling at market open yesterday after Moody’s downgraded the company’s debt to just one grade above junk status on Monday based on fears of the MF Global’s exposure to European debt.
The firm then decided to release their quarterly earnings two days early yesterday, which didn’t reassure investors. The company reported a net loss for the last quarter of $186 million, compared to a $38 million loss at the same time last year. Earnings per share was at negative $1.16 per share compared to a loss of $0.59 per share for the same quarter in 2010.
In addition, the Wall Street Journal points out that MF Global’s $6.2 billion of European debt is cause for alarm compared to the $12 million in trading revenue the company brought in last quarter.