Watch stocks you care about
The single, easiest way to keep track of all the stocks that matter...
Your own personalized stock watchlist!
It's a 100% FREE Motley Fool service...
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
So what: Yesterday was big. Really big. In the matter of just 45 minutes, an out-of-control trading algorithm had led to a gargantuan $440 million trading loss for Knight Capital.
This needs to be put in perspective. After all, it might seem on the small side for those thinking about JPMorgan Chase's (NYSE: JPM ) multibillion-dollar loss at the hands of the London Whale. For Knight, $440 million represents more than 30% of its revenue for the past year. It's more than four times its trailing-12-month profit and $116 million more than its total profit between 2009 and 2011. It's also close to 30% of the company's shareholders' equity, so it's no wonder that Knight said in a press release that the event "severely impacted" the company's capital position.
Now what: This dismounted Knight needs a white knight, pronto. On Thursday, the company was frantically looking for a source of financial backing, if not a buyer for the entire company. Fox Business Network also reported that management is considering a bankruptcy filing.
For the markets, there were definitely some jitters introduced by the Knight glitch. For Knight though, 45 minutes may have been just enough to behead the company.
Want to keep up to date on Knight Capital Group? Add it to your Watchlist.