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E*Trade: A Solid, Deep Value Stock

Most of the ETFC holders predicting $5 and (gasp) $10 shares prices are truely ignorant. Factoring in eventual dilution, the all-time high for ETFC is $3-$3.50.

Yes, that would be an all-time high market cap. I say again, all-time high. As high as when the stock was $25/share. Before ETFC blew up their company with bad risks.

So if ETFC goes to $3.50, it WILL be at an all-time high. And why would anyone think ETFC would trade at an all-time high after the mortgage debacle they are still unwinding?

Dilution kills.

E*Trade: Expect a Takeover Any Day Now

E*Trade currently has approximately 2.9B shares outstanding (counting all soon to be converts) and you expect $5 per share? That would be 14.5B market cap.

That's much, much higher than their all-time high. Yes, the $25 per share high. That old high was with approximately 400M shares and was only 10B. So you think E*trade should be worth more now than before their mortgage debacle? Heck, that market cap is nearly as big as Schwab itself.

C'mon, really...factor the dilution to your math. There are so many day traders and bottom fishers who cannot get past the sub $2 share price (thinking it's dirt cheap) when it's really not.

Dilution kills.

Why the E*Trade Shorts Have It Wrong

Good gawd people. Review the 8-K.

Yes, Citadel did get the 20% dilution of shares for zero. The 1.7B is via a 12.5% coupon bond. They did not pay $4.78.

And yes, they would be positioned well if E*trade were to file bankruptcy. They would be collecting 12.5% interest on the 1.7B up to that possible point, and then if E*trade did go under due to their loan portfolio, they would still be first in line to be given majority control of the brokerage, which will always exist.

Why the E*Trade Shorts Have It Wrong

I don't believe Citadal paid $4.78 for shares. I believe they were given 20% of the company for free and the 2.5B was for the ABS portfolio @ ~25 cents on the dollar plus the balance for a 11-12% coupon bond. And with the bonds they get priority placement in the debt line IF E*trade ever does file for bankruptcy in the coming years.

So, they'd still be well positioned if E*trade ever went bankrupt in the coming years.