Here's why $12 is unreasonable (barring a reverse split which is totally unnecessary).
Why a buyback wouldn't work: In order for the company to have a realistic valuation (We'll say $250 Billion), yet have a $12 share price, Citigroup's board would have to authorize a stock buyback of about 9 billion shares. Citigroup has never, in their entire history, had enough extra cash laying around that they could afford such an outrageous move. In fact, assuming valuation were at $250 billion when they decided to execute the buyback, they'd need over $77 billion laying around. You won't even find a GOVERNMENT with that kind of cash laying around for frivolous purchases.
Acquisition would never happen: No company would purchase Citigroup. Due to its massive size, Citigroup is beyond reach for all but the largest companies to acquire, and even they could only afford a true merger of equals (Think JP Morgan Chase). And for the majority of those companies, purchasing Citigroup would be either a conflict of interests, or in clear violation of antitrust laws. Not to mention OUTRAGEOUSLY expensive. Purchasing Citigroup at $12 a share would cost the acquiring company about $350 billion CASH right now, and that's ignoring the fees whatever lucky-duck Investment Bank were tapped for its services would charge.
Speculation is unlikely: Speculation is when investors are highly optimistic about a company's future prospects. Citigroup's future prospects are well documented in their history. They are of a size where they (and the market) knows they cannot grow significantly anymore. The only thing uncertain about their future is when their dividends will start flowing again, and how much they will be for. No realistic answer to those questions could prompt a 3-fold increase in their price in the next 18 months.
There ARE several companies I have in my sights that ought to be worth 2-3x as much as the market currently values them, but none of them are Citigroup.
Regardless, I view Citigroup as a low-risk, high-reward investment that will almost certainly pan out in the next year or so... but $12 is unrealistic.
