Can Citigroup Be Saved?

Citigroup Inc. (C) announced that it is making plans to planning to increase the number of its common shares outstanding and execute a reverse stock split as part of its effort to convert preferred shares to common shares.

Citi is seeking to exchange about $27.5 billion in public and private preferred securities as part of its agreement with the Treasury Department, which has pledged to match up to $25 billion of the conversions. This deal represents the government's third attempt in five months to prevent the banking giant's collapse.

Reverse stock spilts are common tactics for smaller companies (i.e. penny stocks) to artificially inflate their price. They typically represent a last-ditch effort to cling to their listings on the major stock exchanges and these moves are considered to be the stock markets version of the Hail Mary pass. Stocks typically have sharp declines after the split and all they do is prolong the inevitable.

So do you think this new move by Citigroup will save the company and the stock? Please write your comments below.

by Mark Anderson |  03/19/09  |  Stocks: C,