Will Citi take a dirt nap?

Citigroup (NYSE: C) recently revived advertising slogan is reassuring: "Citi never sleeps." The idea is that since it operates in 100 countries, there is always a Citi employee on the job. But even if you have 300,000 employees, a company can only survive if those people are doing the right things when they're on the job. If not, Citi might never sleep, but it could take a dirt nap.

Citi stock has lost half its value this week and, at $4.71, is down 92% from its September 2000 high of $57.50. Prince Alwaleed said it was dramatically undervalued -- and that was yesterday morning before it lost 26% of its value. I suggested yesterday that the Prince may have miscalculated. How so? If you think that value can be measured by comparing the stock price to potential earnings growth, then I think the Prince overestimated the earnings growth part . For instance, its global cards and consumer lending business makes up 67.3% of net revenues, and global cards shrank 40% in the third quarter.

Since the prince has so much of his diminishing wealth -- his investment fund was down 63% as of yesterday -- tied up in Citi stock, he may have decided that people's memory of his 1991 investment killing based on buying at split-adjusted $2.98 -- will draw in buyers. But things are different now. Citi has posted huge write-downs in four consecutive quarters of losses totaling $20 billion; nine of its investment funds have collapsed this year; it will lose money due to write-offs of consumer loans, commercial real estate, and mortgages; and it has trillions of exposure to derivatives and illiquid assets.