While earlier we reported that the under Vikram Pandit the stock price of Citi, net of reverse stock splits, has collapsed by 90%, some have inquired how it is possible that the market cap under Pandit has declined by far, far less, or from about $150 billion when Vikram was appointed to CEO, to a little over $100 billion today. The answer is simple: shares outstanding.
Some forget that as part of its numerous rescue operations in early and mid-2009, Citigroup had no choice but to issue equity, and more equity, and then issue some more equity (with even the US government having to step in an be a Citi share and warrant buyer of last resort on occasion), in order to raise cash. In fact, as the chart below shows, net of Citi's 1 for 10 reverse stock split just to keep the company above the dreaded $5/share level, the reason why the market cap has not kept up with the plunge in the stock price, is that under Pandit, the adjusted number of shares outstanding has soared from 500 million (was 5 billion pre split) to just under 3 billion (or 30 billion had the split not taken place). And now you know why courtesy of the massive amount of shares outstanding, the C stock price will likely be very rangebound in perpetuity.