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Here’s Why Virtu Financial Is Soaring Today

By Matthew Frankel, CFP® - Updated Feb 8, 2018 at 12:18PM

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Strong earnings powered a big spike in the share price of the high-frequency trading and market-making firm.

What happened

Market-making firm Virtu Financial (VIRT -1.62%) reported better-than-expected earnings for the fourth quarter, and investors seem to be thrilled about its performance. As of 12:15 p.m. EST on Thursday, the stock was up by around 28%.

So what

Virtu reported $0.22 per share in earnings, handily beating expectations of $0.12.

Stock traders talking in front of monitors of quotes and charts.

Image Source: Getty Images.

In addition, the company's 2017 acquisition of KCG looks like it's paying off with synergies that will help drive growth and efficiency. According to  CEO Douglas Cifu:

"The $3.8 million per day we earned in Adjusted Net Trading Income in the fourth quarter demonstrates that this combined entity can generate profitable results in a variety of market operating environments. We also remain confident that the expense and efficiency discipline that is a hallmark of Virtu is being applied to the legacy KCG businesses, and the synergy results reported today and expense guidance we have provided demonstrate this discipline."

The combined company generated Q4 revenue that was 170% higher than a year ago, including 84% more trading income. On the bottom line, normalized adjusted net income grew 26% year over year.

Now what

In a nutshell, Virtu's Q4 earnings were significantly stronger than expected, which is the primary reason the share price spiked today. This could be an especially interesting stock to watch, as the recent upticks in volatility and trading volume could become catalysts for the company's bread-and-butter trading revenue if they continue.

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Stocks Mentioned

Virtu Financial, Inc. Stock Quote
Virtu Financial, Inc.
VIRT
$23.72 (-1.62%) $0.39

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