If there is definitely one stock to avoid these days, it's E*Trade (NASDAQ: ETFC). I went back and forth on it over the summer, wondering if it was worthy of a trade at certain points, but after the broker's Q3 earnings report, I just don't have any good feelings about it right now.
Total net revenue declined over 21% to $377.7 million. The net loss per share from continuing operations on a diluted basis plummeted over 300% to $0.60. E*Trade, as we all know, has been a victim of the whole financial debacle. It's provision for loan losses was $517.8 million in the third quarter. This compares to a provision of $186.5 million in the previous year's similar quarter.
E*Trade states in its release that it is trying to further reduce its exposure to risk and it's keen on shoring up the balance sheet. Good attitude, I suppose. Also, daily average revenue trades for Q3 were up 7%. But it doesn't mean anything. This was a terrible quarter. The data is both horrible and telling.
It's a simple proposition for me: stay far away from E*Trade. Sure, there will come a time when the stock might make for a good investment, but that's a long way off. Technically, the stock is weak. And the broker will be unwinding its exposure to the financial markets for a while.
According to this article, management may seek federal help. The news is bad, and I wouldn't want to step in at this point. E*Trade competes with Charles Schwab (NASDAQ: SCHW) and TD Ameritrade (NASDAQ: AMTD). I'm not saying I'd buy any of the brokers, but I'd rather look at E*Trade's competitors instead of E*Trade itself.
Disclosure: I don't own any company mentioned; positions can change at any time.
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Reader Comments (Page 1 of 1)
10-22-2008 @ 12:47PM
green said...
You don't own the stock because you are clearly a desperate short, who will own it soon as you try to cover your mounting loss. The article was written with a clear slant and selective facts.
10-23-2008 @ 12:26AM
steven said...
I agree with "Green". Poorly written entry that knows little about the company, it's background or the reasons why they reported a net loss of .60. E*Trade clearly over provisioned because of the surplus of cash as a result of the Canada sale.
10-23-2008 @ 11:49AM
Brad said...
Steven obviously doesn't understand e-Trade.