Providian Financial Corp.'s stock lost more than half its value Friday amid worries that the once thriving credit card company has fallen into an insurmountable hole.
The sell-off followed a shake-up Providian outlined after the market closed Thursday. Longtime Providian CEO Shailesh Mehta announced his resignation and the company disclosed plans to scrap its business of giving credit cards to high-risk, or "subprime," consumers.
The company also slashed its earnings estimates for the fourth quarter and warned that the worsening losses in its $32.2 billion credit card loan portfolio made it too difficult to predict its results in 2002.
The news left Wall Street wondering how far the company might fall from just last year, when Providian earned $651.8 million on nearly $6 billion in revenue, and its stock peaked at $66.72.
In a move that will make it more expensive for Providian to raise money, Fitch Inc. on Friday downgraded Providian's credit rating to junk status, citing "the rapid deterioration in the company's franchise."
Shares of the San Francisco-based company plummeted $7.25, or 58 percent, to close at $5.15 Friday on the New York Stock Exchange.