Wow! Stock down 99% in 16 days– How Was Your Week?

Just four days after Bear Stearns Chief Executive Alan Schwartz assured Wall Street that his company was not in trouble, he was forced on Sunday to sell the investment bank to competitor JPMorgan Chase for a bargain-basement price of $2 a share, or $236.2 million. The stunning last-minute buyout was aimed at averting a Bear Stearns bankruptcy and a spreading crisis of confidence in the global financial system sparked by the collapse in the subprime mortgage market. Bear Stearns was the most exposed to risky bets on the loans; it is now the first major bank to be undone by that market’s collapse.

JPMorgan’s just announced acquisition of Bear Stearns for a bargain- basement price of $2 a share, or $236.2 million. represents roughly 1 percent of what the investment bank was worth just 16 days ago. It marked a 93.3 percent discount to Bear Stearns’ market capitalization as of Friday, and roughly a 98.8 percent discount to its book value as of Feb. 29.  In January 2007, Bear Stearns traded at $171/share, with a nearly $23 billion market capitalization.   SO HOW WAS YOUR WEEK?  Wow, I am shocked — Alan Schwartz presided over the loss of 99% of value in a month…..

“The past week has been an incredibly difficult time for Bear Stearns,” Schwartz said in a statement. “This represents the best outcome for all of our constituencies based upon the current circumstances.”