What is happening with Credit Suisse?
Is a 2008 financial crisis looming?
What started as a tweet – now deleted – by ABC journalist David Taylor, on October 1 drove speculations about the identity of this ‘major international investment bank [that] is on the brink’ and sparked a market mania and a social media frenzy.
That weekend, everyone started assuming that the bank in question was Credit Suisse because of its share of bad days.
Another tweet followed the next day explicitly mentioning Credit Suisse.
Retail investors, mainly on Reddit, took advantage of the tweet with the purpose of shorting Credit Suisse stock $CS. But Redditors didn’t get the result they were hoping for this time like it happened last year with the meme stock GameStop. It’s true that $CS didn’t skyrocket, but it’s doing better than it was before the weekend of that tweet (or at least it did for a few days).
The stock price dropped drastically this year, from a high of $14.45 in February 2021 to $4.58 (market open, October 20, 2022), which led to its market capitalization sinking by more than 50%.
Here’s a live chart of the stock by TradingView:
Credit Suisse, one of the largest banks in Europe, was hit by many scandals, some of which are still slacking since the 2008 economic crisis, and among which was last year’s collapse of investment bank Archegos, amidst a churn of executive management changes.
In an attempt to clear its image, the bank is reportedly in the process of selling its US asset management arm to inject money for its reorganization and restructuring plan promised to be revealed this October 27. The investment bank of Credit Suisse will be spun off to be allegedly funded by big investors including Saudi Arabia’s Public Investment Fund.