Knight Capital Group’s trade dropped by 51 percent when a glitch took over the company’s trading system Wednesday, and the company is now down $440 million. Knight Capital bought a set of stocks by mistake due to computer difficulties, but then tried selling them, leading the company to a fall it may not rebound from.
In fact, Knight Capital only made gains of $289 million in the second quarter of this year.
The drop to $3.93 in Knight Capital’s trade had major banks and retail-brokerage firms turning their backs on it, according to The Wall Street Journal.
The drop in trade that preceded big-time brokerage companies to abandon trades with Knight Capital is being dubbed a “technology issue.”
Now isn’t the only time Knight Capital has dipped. During the Facebook IPO disaster, as one of its investors, Knight Capital dropped $35.4 million in the social network’s fall. Knight Capital’s fall succeeded the company’s failure to register with NASDAQ after investing in Facebook.
Also according to The Wall Street Journal, businesses were reluctant to trade with Knight Capital even prior to the technological glitch. This hesitation to do business with Knight Capital predicts an even harder effort to regroup for the company.
Christopher Nagy, founder of the consulting firm KOR Trading called the technological glitch “the beginning of the end,” whereas TradeKing chief executive Don Montanaro said, "They have great people and technology there, regardless of what happened yesterday."
Knight Capital is still responsible for the trades left over, which people are saying could actually mark the end of the company.
Though no Knight Capital customers have been directly affected previously by the company’s losses, Thomas Joyce, chief executive of Knight Capital, people are viewing him in a negative light due to the negative comments he made toward Facebook during the social network’s fall in May.