Knight Capital Group Inc. (NYSE: KCG) is surging this Friday morning. The gain is based on news headlines that the trading firm has secured a line of credit and that the firm is telling trading firms to route trades through Knight again as normal. Whether they will is another question, but the news has shares on the run right after the open.
It is important to keep in mind that a whopping 150,649,800 shares traded hands on Thursday. If that is not a record, it sure sounds like it could have been.
Friday’s gain had been up as much as 30%, but at 9:38 AM EST we have shares trading up 22% at $3.15 with over 10 million shares having traded hands, if you count the premarket.
We do not want to pass on any rumors or fuel any fire, but there are some who believe that Knight cannot survive, as the loss of $440 million (without shareholder and outside lawsuits) is actually almost four-times the $115 million in net income that Knight Capital generated for all of 2011. Knight only made $91 million for all of 2010. To lose that much in a single day is nothing short of a high-speed tire blowout on a motorcycle. No matter what happens, the end result is not pretty.
JON C. OGG