ETFC : E*Trade

An interesting stock is E*Trade (NASDAQ:ETFC) which is traded on NASDAQ.

It’s just some weeks that the stock was traded well above 25,- $ when suddenly a move south started. Looking back, I get the impression someone knew much more than others because the slide started remarkable slowly and inconspicuously.

E*Trade is a broker and very successful. The stock went down when the company unveiled that their bank (E*Trade Bank) was involved in that US sub-prime desaster. Of course – other banks, too (Even Citigroup itself now)- but when an unknown analyst of Citibank “analysed” that E*Trade had to write off hundreds of millions because of sub-prime the stock lost 75% of its value. The real strange (and therefore interesting) thing is: How on earth did this guy come to the conclusion that there was supposed to be a “15% chance of going bankrupt” ?

I mean, is this Citibank analyst Prashant Bhatia a magician from India? Even if he had an inside view into the books of E*Trade – how can he precisely predict an exact “15% chance of bankrupcy”? And then all of a sudden he “has left” and was “unreachable for comments”.

This stinks, folks.

However, neither the SEC has invited him to a nice interview nor E*Trade has threatened Citi for the “irresponsable” words of Mr. Prashant Bhatia. If management of E*Trade was really clean I had expected some more action than just this lame reaction.

Anyway, what makes the stock of ETFC so hot is: it’s a pure bet in any direction. Facts and numbers are not of interest now and everybody is going short or long on this stock to make money, rumors are being spread around in his/her own interest to move the stock.

It could easily be that ETFC is going to recover in some months if the write-offs are all that happened but in the meantime keep an eye on that stock and be careful while jumping on and off it.