Zurich, Switzerland - 13 December, 2015: Credit Suisse sign over the entrance of the Credit Suisse office in Oerlikon. Credit Suisse Group is a Switzerland-based multinational financial services holding company, headquartered in Zurich, that operates the Credit Suisse Bank and other financial services investments.
Credit Suisse share price NYSE collapsed on Thursday as investors reflected on the company’s earnings and new strategy. It dropped by more than 20% in New York and Switzerland, bringing the total year-to-date losses to over 60%. The storied Swiss banking group is now valued at just $10 billion, making it a mid-cap company.
Credit Suisse stock price collapsed hard on Thursday after the firm unveiled a big $4 billion loss and new strategy. The firm’s revenue dropped from more than $5.4 billion in Q3’21 to more than $3.8 billion in Q3’21.
In the same period, its operating expenses dropped to over $4 billion while its closely-watched CET ratio dropped to 12.6%. Most importantly, its cost-to-income ratio rose from 84% to 108% while assets crashed by more than $12 billion.
The biggest catalyst for the Credit Suisse stock price was the company’s change of strategy. The New Credit Suisse will be a much smaller bank focusing on wealth management and Swiss banking. It sold its structured finance products to Apollo Global Management and Pimco.
At the same time, it will resurrect the First Boston name in the US, which will include its capital markets and advisory business. Further, Credit Suisse will create a new bad bank that will include its riskiest assets. It will also sell $4 billion shares; some to Saudi National Bank.
Credit Suisse share price NYSE dropped because investors believe that the company will need to raise additional capital in the future. Analysts believe that the company needs at least $8 billion to implement a turnaround.
So, is Credit Suisse stock a good buy? I believe that the management unveiled a solid plan that will help the company become profitable in 2024. Therefore, there is a likelihood that the stock will recover in the coming months since it has become incredibly undervalued. Also, there is also a possibility that the highly undervalued company will be acquired.
The daily chart shows that the CS share price has been in a strong bearish trend in the past few months. On Thursday, the stock erased most of its recent gains. It remains below all moving averages. The decline happened after the company made a break and retest pattern when it moved close to $5.
The Relative Strength Index (RSI) slipped below the neutral level. Therefore, for now, the stock will likely remain under pressure as investors focus on its turnaround. In the medium and long-term, I suspect that it is a good buy for brave investors.
This post was last modified on Oct 28, 2022, 05:45 BST 05:45