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Citigroup Inc. Message Board

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  • stkplyr_46 stkplyr_46 Feb 28, 2009 6:35 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.

    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.


    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

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