E*Trade Shares Dip Below Post-Split Level - TheStreet

E*Trade Shares Dip Below Post-Split Level

E*Trade veered sharply to the downside on Friday, falling below where the stock was trading at after it completed a reverse stock split earlier in the week.
Author:
Publish date:

NEW YORK (

TheStreet

) --

E*Trade Financial

(ETFCD)

shares veered sharply to the downside on Friday, falling below where the stock was trading at after it completed a reverse stock split earlier in the week.

The stock was off 4.8%, or 72 cents, to $14.35 as the broader financial markets also took a dive on Friday. Volume of 1.8 million was relatively subdued in comparison to the issue's trailing three-month daily average of 5.3 million.

The 1-for-10

reverse split

of E*Trade's common shares went into effect the start of trading on Wednesday and the stock opened at $14.50.

The shares rose on both Wednesday and Thursday, getting as high as $15.40, before today's pullback, which comes with the Dow Jones Industrial Average plunging more than 200 points by midday following a disappointing government report that

job growth

in May was weaker than expected.

Reverse stock splits

are typically implemented when a company feels its the price of its common stock has fallen unreasonably low in order to bolster the issue's appeal to investors.

E*Trade is slowly recuperating from being hobbled by devalued asset-backed securities and soured home equity loans and other mortgages during the worst of the financial crisis. The online broker was forced to recapitalize twice, with Chicago-based Citadel Investments Group taking a major stake in the firm. Citadel's founder Ken Griffin now sits on E*Trade's board.

The company has made progress on a number of fronts so far in 2010. It named a new CEO in March, former

Citigroup

(C) - Get Report

executive Steven Freiberg, who has pledged to continue the

online brokerage's

turnaround strategy. In late April, it reported a slightly narrower than expected loss for the first quarter as revenue topped Wall Street's average estimate, and the current view of analysts polled by

Thomson Reuters

is that E*Trade should be able to get back in the black in the third quarter of this year.

Freiberg has already dismissed questions about a possible acquisition of E*Trade. Of course, that hasn't stopped market speculation, with the most prominent rumored buyer being one of its main rivals,

TD Ameritrade

(AMTD) - Get Report

.

E*Trade's share price has languished under $2 for most of the past year. Prior to the reverse split, the stock was down more than 90% from a five-year high of $27.57 reached in April 2006.

The company is scheduled to release its second-quarter results on July 19. The current average Wall Street estimate is for a loss of a penny per share on revenue of $328.4 million.

Broker sentiment on the company remains guarded as eight of the 14 analysts covering the company have hold ratings.

--Written by Laurie Kulikowski in New York.