Update Citigroup (C)

Citigroup has given many investors a scare. Citigroup announced that it will have a reverse 10-1 stock split. This could be because the company sees a falling stock price, and doesn’t want the stock to reflect an even lower price than what it is at. This is to be in effect sometime in May. The company had also announced a 1 cent dividend to be effective at the same time as the split, rendering a pitiful 0.03% yield. But hey, it’s a start! Now many people have been frightened by the reverse stock split. I do agree that this action could foreshadow a falling stock price. I also believe that the stock will remain below 5, or 50 after the reverse split, until after June of this year. But after that, the reverse split could actually attract some investors. Many people ignore this bank stock as it is at such a low price. With a higher stock price, it suddenly seems to be a more fundamentally bound stock. More investors may be comfortable investing in the stock as it is not at such a low price. This should negate some of the downward effect of that the reverse split has brought. I still say buy the stock, it should multiply several times over in the long-term; this is just a little bump that should only scare short-term traders.