FXCM speculation on Leucadia deal renews: shares up 77% then down 20% Monday


If Forex traders like volatility, then they should absolutely love trading shares of FXCM Inc (NYSE:FXCM).

After a relatively slow week last week, FXCM shares got back on the rollercoaster they have been riding the past while. Monday saw FXCM shoot up from the open, rising a whopping 77% from their Thursday close of $11.15 (there was no trading on Friday December 25) to hit a mid-day high of $19.74.

However around 2pm EST, two hours from the close, profit taking began overcome the buyers and FXCM dropped nearly as fast as it has risen – but not quite as far. FXCM did give back $4-per-share of its gain (or about 20%) by the closing bell, but the shares were still up 41% on the day.

A day trader’s dream stock.

So what is driving all this volatility in FXCM stock?

As we’ve written several times before, the answer is very simple. There has been, and will continue to be, a lot of speculation in FXCM stock following management’s release of a note on Friday December 11 indicating that they are trying to renegotiate the terms of the $300 million rescue loan FXCM received back in January from Leucadia National Corp (NYSE:LUK).

If FXCM can indeed ‘buy back its own upside’ from Leucadia, it is conceivable that FXCM might become once again an attractive investment. Without new terms, however, most of the future upside in FXCM belongs to Leucadia – not to FXCM shareholders – and therefore investors will likely dump the stock again.

Leucadia has said nothing one way or the other about the situation. So until they do, or until we hear more definitively from FXCM management as to whether or not they can actually renegotiate the loan, we expect more of the same ultra-volatile trading in FXCM stock, alternating between hope and despair that the future is bright, and that the future (whatever it is) will belong again to FXCM shareholders.

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FXCM speculation on Leucadia deal renews: shares up 77% then down 20% Monday

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