Retail Forex broker Gain Capital Holdings Inc (NYSE:GCAP), parent of the Forex.com and City Index brands, saw its share price drop a further 7% on Wednesday to close at $6.68, its lowest closing price since January.
During the trading day Gain shares actually dropped as low as $6.15 – down 14% on the day – before recovering somewhat later in the day about half of the loss, up to $6.68.
The mid-day $6.15 price set a new 52-week low for Gain Capital.
Gain Capital share price, past 12 months. Source: Google Finance.
So what’s going on?
As can be seen in the one-year share price graph above, Gain shares fell off a cliff in early July, and haven’t really recovered since. The initial July slide came following comments made by Gain CEO Glenn Stevens indicting that trading volumes were looking light after Gain acquired City Index (at the beginning of Q2-2015).
Since then there hasn’t really been any bad news out of Gain, but also a noted lack of good news. With the company announcing Tuesday that Q4 revenues were a little weak – Q4 revenues at Gain were actually below last year’s Q4 and that was before Gain bought City Index – as were February trading volumes, it looks like investors are heading for the exits until more good news appears on the horizon.
Gain’s announcement that its just-released financial statements should no longer be relied upon due to errors in the manner in which the Company accounted for income taxes shouldn’t help things either. The company’s planned restatement of its financials is also causing a delay in the filing of Gain’s annual 10-K filing. (Note that Gain disclosed that it does not expect that the results to be reported in the Form 10-K will be materially different from the results it already announced).
Gain remains in a fairly strong financial position – the company made $10 million of profit in 2015, it has a healthy cash position of $172 million and debt of just $122 million – however investors don’t see a lot to be excited right now out of Gain Capital.