Now that the trajectory of the share price of Citigroup (NYSE:C) has reversed direction and is plunging, it is close to falling below the $4 a share mark, not too long after flirting with the $5 a share mark, where some thought it would have support, and the Treasury could reap a nice windfall as they sold off their shares in the company.
Alas, that seems like it’s not to be, as economic forces are going against equities now, and the Treasury has already lost over $1 billion on paper from the weakening shares of Citi.
The Treasury holds Citigroup shares at $3.25 each, which had recently given them a potential profit of $2.415 billion. As of the close on Wednesday, that had already shrivelled to $1.395 million, where the stock ended the session at $4.18. The stock is lower than that as I write, standing at $4.08 at 1:47 EST.
Until more clarity with the regulatory decisions in the banking industry are made, and the European Union sovereign debt crisis and its depth is understood, it’s going to be hard for equities to rebound, and that’s more so with companies like Citigroup.
Add to that Vikram Pandit’s guidance that shareholders can’t expect the company to continue on like it had in the first quarter, as the share price moving up increased expectations, which Pandit was quick to balance when issuing the quarterly report.
Finally, the economy isn’t in any type of real and sustainable recovery, contrary to what the media is portraying, and taking all these things into consideration, the Treasury will have a hard time getting what they originally thought they would from Citigroup when they sell their shares through the rest of the year.
