Your analysis is off by a factor of 10! There are now 2.25Bln fully diluted shares - what dont you understand? Recurring earnings power (post the 2009-2010 writedowns) in 2011 is 15 cents a diluted share. Existing shareholders have been rinsed with a 75% dilution because otherwise E*Trade would file Chpt11 and you would get 0. You should have bought the bonds...not the stock - but Jeremy doesnt understand.
More brilliant analysis from Jeremy! The reason the bonds are trading at par is because THEY ARE GETTING 75% OF THE COMPANY! The fully diluted sharecount will be 2.25BLN. This trade has nothing in common with MS/WFC where dilution was minimal. When is Jeremy gonna stop costing readers money? The stock will now trade between 1.25 - 1.75$ as the market comes to grips with 15 cents of 2011 fully diluted earnings power. If you dont know what i am talk about stop trading etfc.
If the guy who wrote this article had a clue in the world he would know that Citadel owns 75% of E*Trade's massive debt. He would also know that the company is working on a massive debt for equity swap that will dilute shareholders at least 50%. This deleveraging is being done at the behest of the OTS. If E*Trade does not delever I expect there will be heavy repercussions from their regulator. This stock is highly speculative and has true value at around 50 cents. The author should do his homework before punting in penny stocks...why do E*Trade bonds trade at 50-60 cents on the dollar?
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