CitiGroup Citibank Shares goes for Reverse Stock Split What is a Reverse Stock Split

Citigroup as you all know is trying their best to make up for the losses incurred in the sub prime crisis. With million watching their horrible stock prices almost plunging below $1, Citigroup is now planning to do a reverse stock split. Lets first understand what is a reverse stock split ? A reverse stock split reduces the number of a company's shares outstanding, but increases the value of its earnings per share. Ever after the reverse stock split, the market value of the shares remains the same. Citibank or Citigroup is doing the a reverse stock split in an effort to make their stock look more valuable if the share price is significantly low, like it was close to $1. Immediately after the annoucement of a reverse stock split of citigroup shares, Citigroup shares rose by 10% in early trading. Citigroup said all private holders of convertible preferred securities, with a total liquidation value of $12.5 billion, have agreed to the swap. The bank will also offer holders of non-convertible preferred and trust preferred securities to exchange their shares. The conversion price is $3.25 per share. Citigroup said it plans to launch the reverse stock split in early April. If you currently hold citigroup shares or bought shares recently when they hit historically low stock prices, we strongly suggest you hold Citigroup. It has already seen the bottom and most likely would only see a fair or better price for the stock. According to economic indicators, Citigroup would be back in business by late 2009 or second quarter of 2010, we are expecting citigroup shares to trade in the range of $15-20 by late 2009.