Citigroup (C) 1-for-10 Reverse Stock Split Happens Today
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Citigroup's (NYSE: C) 1-for-10 reverse stock split will be effective after the close of trading Friday, May 6th, with shares trading on a split-adjusted basis at the opening of trading Monday May 9th.
The reverse stock split greatly reduces the number of outstanding shares of Citigroup common stock from approximately 29 billion to approximately 2.9 billion.
Reverse stock splits are generally viewed as a sign of weakness, but in Citigroup's case it could actually help the company and stock.
Citigroup’s higher share price, as a result of the split, could free up some larger institutional investors to buy the stock. Certain funds may have been unable to get involved with the stock because the price was below share price thresholds mandated by the specific funds.
The lower share count could also allow the price to find some support and drift higher over time, as the tens of billions of shares in the market was simply at an unmanageable level and may have dissuaded some from getting involved.
One important market event to watch due to the split will be market volume. Citigroup has been the most activity traded stock for some time, with shares trading on average about 400 million shares per day. With the reverse split, daily volume in Citigroup could plunge to about 40 million, which could make a big dent in the average daily trading volume in the market.
The reverse stock split greatly reduces the number of outstanding shares of Citigroup common stock from approximately 29 billion to approximately 2.9 billion.
Reverse stock splits are generally viewed as a sign of weakness, but in Citigroup's case it could actually help the company and stock.
Citigroup’s higher share price, as a result of the split, could free up some larger institutional investors to buy the stock. Certain funds may have been unable to get involved with the stock because the price was below share price thresholds mandated by the specific funds.
The lower share count could also allow the price to find some support and drift higher over time, as the tens of billions of shares in the market was simply at an unmanageable level and may have dissuaded some from getting involved.
One important market event to watch due to the split will be market volume. Citigroup has been the most activity traded stock for some time, with shares trading on average about 400 million shares per day. With the reverse split, daily volume in Citigroup could plunge to about 40 million, which could make a big dent in the average daily trading volume in the market.
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