E*Trade Bashed Following Bankruptcy Buzz

E*Trade’s stock has spent a good deal of time in the $8-$9 range, just comfortably floating along.  But due to warnings about earnings and even bankruptcy, the stock lost over 50 percent of its value today, and is now sitting at $3.57, down $5.02 from its opening price.

A report from Prashant Bhatia, an analyst at Citi Investment Research, is generally being fingered as the cause of the fall.  According to Herb Greenberg, Bhatia wrote, “The extent of poor risk management in our view, has put the viability of the franchise at risk.”  Others followed suit, however, so despite E*Trade’s protests, there’s likely something to all this.

Hence the 58 percent fall in E*Trade’s stock.  By comparison, out of nine “related companies” listed by Google Finance, only three are in the red (for the day), and the worst loss among them amounts to roughly 20 percent.

Of course, there’s about 45 minutes left in the trading day, so there’s always the chance that this story will soon become outdated; E*Trade’s stock already appears to have stabilized somewhat.  Still, there’s nothing that seems ready or able to reverse the drop.

On the whole, the DJIA is up $35.85 at the moment, while the Nasdaq is down $20.47.