WeWork Hits Jefferies Financial Group Hard
Investors have to know what exposure their companies have to certain unexpected events, even if it's well beyond the core business on which a given company focuses the bulk of its attention. For Jefferies Financial Group (NYSE: JEF), what drives most of the financial company's results is the success of its investment banking and asset management businesses, which in turn tend to rise and fall with market sentiment. However, Jefferies has some other holdings that most would consider not to be core to its primary business -- and when something happens to them, investors learn the hard way what the impact on the entire company can be.
Coming into Jefferies Group's fiscal third-quarter financial report on Sept. 26, few investors foresaw anything that would disrupt a fairly benign environment for financial markets overall. However, Jefferies' writedown of its investment in WeWork parent The We Company had a negative impact on its results, and shareholders weren't happy to see just how big the consequences were.
Jefferies Financial Group's fiscal third-quarter financial results didn't live up to expectations. Net revenue fell more than 25% to $856.8 million, which was far worse than the $1.07 billion in revenue that most of those following the stock had hoped to see. Net income was down almost 75% to $48.5 million, and the resulting earnings of $0.16 per share fell far short of the consensus forecast among investors for $0.42 per share.
Source Fool.com