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Citigroup Inc. Message Board

  • refreshwater22 refreshwater22 Feb 28, 2009 5:11 AM Flag

    Dilution effect on shareholders explained

    The dilution effect of common stockholders:

    Rduced EPS (when citi becomes profitable).
    Current number of outstanding stocks are 5.45 billion. This dilutioin is adding abt 15 billion more common stock ($25 billion govt + $25 billion pvt @ $3.25 conversion/share).

    Long term: This means that the stock price will never rise to more than 25% (around $10-$15) its peak in the $50's 2-3 yrs ago.

    The scariest part is that Citi is de-leveraging itself. So essentially it is selling of money making assets. Hence, their net income will not be even close to what it used to be.

    So in addition to the dilution, their Net income, when they turn profitable, is going to be less than what it used to be. That's a double whammy on their EPS.

    Just based on the dilution, their stock price was not going to exceed $10-15. If you take the earnings factor into account. I would say $7-8 would be a target price when they return to full profitability.

    So i dont know what price we will see in the next 2 weeks.

    As a disclosure: I have 9500 shares avg $2.8

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    • this stock has already been labeled the next AIG


      WAKE UP!

    • Acseprt and I buy 12000 for1,43,before sell 18000 for1,50
      3,25 -36%*1,50 City buy for 1,50
      Gov give 25 bill. +20
      is very good deal

    • The dilution effect of common stockholders:

      Rduced EPS (when citi becomes profitable).
      Current number of outstanding stocks are 5.45 billion. This dilutioin is adding abt 15 billion more common stock ($25 billion govt + $25 billion pvt @ $3.25 conversion/share).

      OK

      Long term: This means that the stock price will never rise to more than 25% (around $10-$15) its peak in the $50's 2-3 yrs ago.

      Wrong. The peak varied over the years with a consistent # of common shares. $50 was the peak, but not the cap

      The scariest part is that Citi is de-leveraging itself. So essentially it is selling of money making assets. Hence, their net income will not be even close to what it used to be.

      wrong. Citi may be delevraging, but thier expenses are decreasing dramatically due to deleveraging which means more profit.

      So in addition to the dilution, their Net income, when they turn profitable, is going to be less than what it used to be. That's a double whammy on their EPS.

      ok

      Just based on the dilution, their stock price was not going to exceed $10-15. If you take the earnings factor into account. I would say $7-8 would be a target price when they return to full profitability.

      wrong based on above

      So i dont know what price we will see in the next 2 weeks.

      As a disclosure: I have 9500 shares avg $2.8

    • tradingfasterthanlightspeed tradingfasterthanlightspeed Feb 28, 2009 6:22 AM Flag

      This stock is not worth $5.70 or higher. This stock aint worth $2.00 period. It`s book value is $1.00 anything over that and it`s overvalued. This is just a hyped stock per and simple. The government is playing you like the fools you truely are. There are still people holding this above $4.00 freakin stupid retards.

    • "... $5.70 (looking at 1.50/26% old common shareholder’s new stake).."

      I think u cant value like that. its incorrect. heres why.

      1.5 that you used is the share price which reflects the total market cap. Now the market cap is not goign to be a constant. It will increase as shares are added. So if you take the increase into account you will see your valuation go down.

      I still believe even if you add the additional shares in that citi is undervalued.

      Get this BIytch back to profitability. We, ur shareholders are waiting for it.

      • 1 Reply to refreshwater22
      • At the end of the day. The gov is in for 3.25... institutions need above 5 to partcipate. If the company/Gov want to get their money back/profitable return, there goal will be to get it above 5 sooner than later...

        so price targets... may take a month or so, but will get above 5 at some point when this mess stabalizes and maybe see a few buck above that...

        7 bucks probably by 3rd/4th quarter...

        Thats baseds on analysts expectations of economy starting to head north... Believe +3 GDP 4th quarter as example projection.

    • Or conversely the market is valuing C at about $5.70 (looking at 1.50/26% old common shareholder’s new stake). This is a price reached after the death spiral panic (orchestrated by short sellers) pushed C down from 20 to under 5 in a matter of weeks.

      Also the conversion of pfd shares into common share will save C at least 3 billion a year in dividends or over a 6-7 year period $1 per share counting new common shares as 25 billion.

      So I think right now the market is grossly undervaluing C!

 
C
54.97+0.13(+0.24%)May 22 4:00 PMEDT