Wit Capital Strikes Deal With AOL

The era of after-hours stock trading is nearly upon us, and online investment bank Wit Capital (Nasdaq: WITC) is aiming to capitalize on this growing market. On Thursday, Wit Capital announced a deal that will make it a founding partner and the first company to provide information for America Online’s (NYSE:AOL) new after-hours trading center.

Under the terms of the deal, Wit Capital will be the exclusive anchor tenant for AOL’s After Hours Center for the first six months after AOL’s new area launches. The After Hours Center is expected to go live on November 1st. By that time, Wit Capital is expected to launch a new service that will allow its customers to trade after hours.

“Wit Capital was a leading pioneer of the integration of the Internet and the capital markets, and by working with Wit we expect to be at the forefront of this rapidly evolving extended hours space,” said Rob Shenk, director of America Online’s Personal Finance Channel.

Wit Capital is paying AOL for its exclusive status, but financial terms were not disclosed. AOL will also promote a series of live chats with Wit Capital analyst Jonathan Cohen.

Wit Capital will use AOL’s interactive marketing sales force to build advertising and sponsorship opportunities. Wit Capital and AOL will share revenues derived from advertising.

Wit Capital Has Expanded Customer Options

This new deal is Wit Capital’s latest move that could dramatically alter individual investing. Wit Capital has made its name largely by offering its customers an opportunity to buy initial public offerings at the offering price. The company has participated in more than 120 transactions, including recent high-flying IPOs such as Juniper Networks and Stamps.com.

The deal with AOL should mean significant brand awareness for Wit Capital. AOL’s has more than 17 million subscribers, and the company says its Personal Finance Channel is the leading online financial destination.

Stock Impact

Shares of Wit Capital rocketed 4-1/8 to to 24-1/4 after the news, a gain of more than 24 percent. Wit Capital stock went public at $9 in June, and the customers who got that offering at that price have done well for themselves. However, Wit Capital stock is still well off its highs of $38.

Shares of AOL continued to struggle on Thursday, falling 3-1/2 to 83-15/16.