NEW YORK (AP) — Trading losses from the messy Facebook public offering helped knock Knight Capital's quarterly net income down 81 percent.
The New York trading firm said Wednesday that the botched IPO resulted in a $35.4 million trading loss, a blow to earnings of 23 cents per share.
Knight Capital's stock sank 5 percent in Wednesday trading, falling 59 cents to $11.15.
Technical glitches on the Nasdaq stock exchange made a mess of Facebook's public offering in May. A series of problems delayed the opening of trading and left investors wondering whether their orders to buy or sell went through.
Knight Capital Group Inc. earned $3.3 million, or 4 cents per share, in the second quarter. That's a steep drop from the $17.5 million, or 19 cents per share, it earned in the same quarter the year before. Revenue fell to $289 million in the second quarter from $325 million.
Pulling out the impact from the Facebook IPO as well as an investment gain, pre-tax earnings were $30.8 million, or 20 cents per share.
Analysts had predicted the company would report earnings of 10 cents per share, and revenue of $282 million, according to the data provider FactSet.
The ongoing drop in stock trading also weighed on Knight's revenue. Its market-making division pulled in total revenue of $113.5 million for the quarter, down from $145 million the year before. The second quarter results included a $26 million hit from the Facebook IPO.
In a statement accompanying the earnings announcement, Thomas Joyce, Knight's CEO, said retail trading activity had slumped to the lowest level since the 2008 financial crisis.
Institutional sales and trading division's revenue sank to $109.7 million from $134.9 million the year before, as trading activity slowed in the U.S. and Europe. Knight said Facebook's IPO cost $9.4 million to institutional sales and trading.
Nasdaq said last month that it would provide $40 million in cash and credit to reimburse firms that lost money on Facebook's opening day.
Joyce restated that the firm is "evaluating all legal rights and remedies in connection with the Facebook IPO."