Instinet Shares Tumble to All-Time Low
Monday September 23, 4:48 pm ET
NEW YORK (Reuters) - Shares in electronic stock trading platform Instinet Group Inc. (NasdaqNM:INET - News), fell more than 16 percent on Monday, hitting an all-time low in unusually active trade.
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Shares in New York-based Instinet dropped 43 cents, or 11.5 percent, to $3.30, with more than 1 million shares traded, about triple the 52 week average trading volume. Earlier, the stock hit an intraday bottom of $3 per share.
Shares in Instinet, which is majority owned by global news and information company Reuters Group Plc (London:RTR.L - News; NasdaqNM:RTRSY - News), have fallen some 80 percent since its public debut at $14.50 in May 2001.
"There are a couple of things that are going on (that drive the stock down)," said Todd Halky, an analyst at Putnam Lovell NBF. "It's the dividend date today when Instinet pays every stock $1 in dividend. Instinet's merger with Island closed on Friday, but some investors hold the stock for dividends, and they are dumping it today."
Monday's stock quote of Instinet has excluded the $1 per share paid out in dividends, said Halky.
On Friday, Instinet said it closed its acquisition of rival Island ECN for about $389 million. The merger is expected to create the largest alternative electronic trading network in stocks listed on the Nasdaq stock market.
Another reason for the fall in Instinet shares is that starting from Monday, Island will be subject to U.S. Securities and Exchange Commission rules requiring that it will no longer disseminate quotes on exchange-traded funds -- which account for as much as a third of its trading, said Halky.
An ETF is a basket of stocks that trade as a single issue, under one ticker symbol.
"I think at about $3 per share, the stock is oversold, but not completely," said Halky. "The stock has been under significant pressure lately. With SuperMontage launched in October, Nasdaq will be a significant competitor to Instinet/Island. In the short term, I don't see any catalyst to drive the stock up."
SuperMontage is Nasdaq's new trading platform. |
