Lehman Brothers: Sounding the Alarm of Another Financial Failure

An article I stumbled across yesterday entitled “Credit crunch may take out large US bank warns former IMF chief” brings back memories of the downfall of Bear Stearns.

The target now is Lehman Brothers (LEH). On CNBC’s Asia Squawk Box Wednesday, Ron Ianieri mentioned that "Lehman is definitely right there. They're caught between a rock and a hard place. They have to raise capital right now."

The news on the street yesterday about Lehman Brothers is that they would have to write down about $4 billion dollars due to their credit exposure.

As a result of the news, LEH stock fell $1.96 or 13.04% through yesterday’s trading; after the market closed, the stock continued to slide as doomsayers continued putting pressure on the stock. People are betting that LEH will continue to decline based on the options trading that took place yesterday.

We should pay careful attention as to where the price of LEH will be at the market's close on Friday. My guess is that by the end of Friday, based upon on the amount of trading and the downward trend of LEH, the stock will fall below $10.00.

Disclosure: I have no position in LEH

Comments

[who:]

only people holding the stock are ones who have lost most of their value.

there is no reason to start a new long position as there is too much uncertainty. hence the only way is down.

2008 Aug 20 06:27 AM

[Mex:]

For once, I'd love to read an insightful article instead of something like this which is a mish-mash of rumour mongering mixed in with how the stock price is doing....do you have any street credentials ? i notice that amazingly you're writing articles, yet your bio is empty...explain that one ?

2008 Aug 20 08:39 AM

[buyitcheap:]

With the GS downgrades, LEH could be completely toast.

2008 Aug 20 09:31 AM