Citigroup shares are down 45% YTD. Should I invest?

Citigroup shares are down 45% YTD. Should I invest?
Written by:
Stanko Iliev
5th October, 16:51
  • Citigroup ended Q3 as the worst-performing financial stock for the last three months
  • Citigroup's new equity chief began to cut jobs
  • This stock could be a good long-term investment but maybe now is not the best time to invest in Citigroup

Citigroup (NYSE: C) shares have weakened from $80 below $40 in less than several months and the current price stands around $45. The next several months will be competitive for the banking industry but even with the COVID-19 pandemic, the business of Citigroup is going well.

Fundamental analysis: Citigroup is a stable bank with a good position on the market

Citigroup is an American multinational investment bank and financial services corporation headquartered in New York City. This is the third-largest banking institution in the United States with over 200 million customer accounts.  

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When trading this stock, investors should have in mind that Citigroup is a stable bank with a good position on the market. This stock could be a good long-term investment but maybe now is not the best time for buying Citigroup shares because the price could weaken even more in the upcoming weeks.

If we compare total stockholders’ equity of $192B and the market capitalization of $93B, we can notice that this stock is not overvalued. Citigroup increased its revenue in 2019 to $76.5B from $70.8B in 2018 and the growth projects will ensure that the numbers will be moving up in the future.

Another useful information for potential investors is that this company has paid more than $14B dividends to its shareholders in the last three years and this number can be even bigger in the future. There are also some obvious risks when it comes to buying Citigroup stock and there are several negative facts that are connected with this bank.

The bank’s net income in the second quarter came in significantly lower than in the same quarter last year. According to the latest news, Citigroup’s new equity chief began to cut jobs.

He started with managing directors but this could move to lower-ranked workers. This bank ended Q3 as the worst-performing financial stock for the last three months, down more than 15%.

The main reason for this is the Covid-19 pandemic but once the situation has stabilized, the price of this stock will be at much higher levels.

Technical analysis: The price could weaken even more in the upcoming weeks

When trading Citigroup, you should have in mind that the price could weaken even more in the upcoming weeks.

Data source: tradingview.com

On this chart, I marked important resistance and support levels. The important support levels are $40 and $35, $50 and $60 represent the resistance levels.

If the price jumps above $50 it would be a signal to buy Citigroup shares and we have the open way to $55. Rising above $60 supports the continuation of the bullish trend and the next price target could be located around $70.

On the other side, if the price falls below $40 it would be a “sell” signal and we have the open way to $35.

Summary

My opinion is that this stock could be a good long-term investment but maybe now is not the best time to invest in Citigroup shares because the price could weaken even more in the upcoming weeks. This bank ended Q3 as the worst-performing financial stock for the last three months but the main reason for this is the Covid-19 pandemic. If we compare total stockholders’ equity of $192B and the market capitalization of $93B, we can notice that this stock is not overvalued.

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