Credit Suisse Stock is Tanking Amid Archegos Hedge Fund Liquidation
On Monday, the bank warned that its first-quarter profits could be severely affected by US hedge fund Archegos liquidating. The massive sell-off erased nearly $5 billion from Credit Suisse's market capitalization. The stock has fallen another 55 cents or 5% to sit at a price of $10.60 at Wednesday's closing.
The bank reported last week that it had issued margin calls to a US fund, presumed to be Archegos Capital Management, but the firm defaulted. Credit Suisse is now working to unravel the positions and stated that the losses could be "highly significant and material" to its first-quarter earnings, which are set to be released next month.
Credit Suisse could be looking at a loss of $3 billion to $4 billion. Analysts have been bullish on the stock up until this event, citing reports that the bank generated its most pre-tax income in a decade in the first two months of 2021 and that investment banking revenues were up.