Citigroup Crashes (Planned?)!!!

Three months ago Citigroup looked pretty promising! What happened, what changed? Not much actually, Citi is still in the same position they were in 3 months ago. However, it is in the company’s interest to buy back the government’s 34% ownership with a stock price well below its $5 level back in August. So it shouldn’t be a surprise if they drive the stock down. Would you buy something for full price or on sale?

Citi crashed with massive volume Thursday (12/17), because the company priced their large 5.4 billion stock offering of common shares well below their expected target price that was reported by CNBC to be between $3.30 to $3.35 a share. Their new offering price is $3.15 resulting in $17 billion in raised capital; additionally the company will sell $35 million in equity units for $100 each.

News of this announcement disappointed the U.S Treasury Department and investors. The U.S. Treasury froze the sale of any its shares relating to Citi’s new offering, thus, stirring caution and panic in investors.

Hmmm wasn’t it just the other day that Citigroup’s CEO Vikram Pandit said “We owe the American taxpayers a debt of gratitude and recognize our obligation to support the economic recovery through lending and assistance to homeowners and other borrowers in need.”

And how will he do that? Oh yea! That’s right… buyback the government’s (tax payer money) 34% ownership stake set at $3.25 a share for $3.15 a share. What a debt of gratitude!!!

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This entry was posted on December 17, 2009 at December 17, 2009 and is filed under Banks. You can follow any responses to this entry through the RSS 2.0 feed.