Acknowledging the grievances of its investors,
Nasdaq OMX Group Inc.
) decided to increase the compensation for losses incurred due to
the failure of
) initial public offering ("IPO") by $22 million. This will finally
take the compensation amount to $62 million, according to a Reuters
Even though no reason was disclosed officially, it is expected
that with the second quarter earnings release this Wednesday,
Nasdaq will substantiate this sudden hike in the compensation
Companies like Knight Capital (a unit of
Knight Capital Group
, Inc. [
) Automated Trading Desk and
), who suffered heavy losses due to the failed IPO of Facebook,
await Nasdaq's stance on paying for the damages, as the current
amount of $62 million is not adequate to reimburse the entire loss.
The total loss incurred for the $16 billion IPO exceeded $200
million due to a technical glitch that delayed trading for
Last month, the company promised to pay $40 million to the
trading firms that incurred losses owing to the blunder on the IPO
day. It had decided to make a cash payment of $13.7 million and the
balance was to be remitted by subsidizing the trading fees of the
concerned investors for the next six months.
As per the latest announcement, the company plans to make all
payments related to the compensation in cash over the next six
months to those companies who agree not to take any legal action
Even though Nasdaq's share prices reflect a minor decline of 2%
to close at $22.37 per share last Friday, we expect the company to
revive from the disaster soon.
With Nasdaq scheduled to disclose its results before the bell on
, the Zacks Consensus Estimate is pegged at 60 cents per share,
representing a year-over-year decrease of 3.2%. The company retains
a Zacks #3 Rank, which translates into a short-term Hold rating and
alongside we maintain a long-term Neutral recommendation on its
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