Questcor Pharmaceuticals Inc. (QCOR) dropped as much as 48% in intraday trading on Wednesday. Health insurance provider Aetna, decided to stop covering Questcor’s Acthar Gel, that makes up all of the company’s revenue. After the dust settled, Questcor revealed Aetna’s coverage of its only drug, accounted for only 5% of its’ overall revenue; however, Questcor lost nearly half of its market capitalization in one day!
Traders in today’s market have the ability to demolish a company in nearly minutes. No longer do investment firms conduct research and create long term positions; instead, a new era of high frequency trading incorporates programs that run algorithms to react to changes in the market and automatically make corresponding trades. The power of this technology has created an unfair playing field for other traders, both professionals and amateurs. Executives from these firms have confirmed that they would like to see the U.S. Securities and Exchange Commission regulate the practice, which as of now is completely unregulated. Until the Commission does something to minimize the effects of high frequency trading, drops of 40% or more in a trading day, may become regularities in the markets of today.
CNBC Jim Cramer: Questcor Has Had An Incredible Run