Back to the bubble at Citi by Colin Barr @FortuneMagazine March 21, 2011, 5:28 PM EST E-mail Tweet Facebook Google Plus Linkedin Share icons Citigroup’s headed back to a place it hasn’t seen since 2007. The bank said Monday it will do a 1-for-10 reverse stock split in a bid to push its stock price out of the single digits. With Citi c trading at $4 and change, the move is likely to push Citi stock back above $40 when it takes effect in May. Coiled spring The last time Citi shares hit that level was Nov. 1, 2007, just days before Citi admitted that it had misstated its exposure to the subprime-related junk that a year later nearly brought down the bank. Nov. 4, 2007, was the day Chuck Prince resigned, reasoning that the “only honorable course for me to take as chief executive officer is to step down.” Since then, the bank has posted billions of dollars of losses, received the biggest U.S. bank bailout and repaid all its government loans. Its shares have plunged more than 80%. But Citi’s market value actually has held up better than you might think, thanks to the billions of shares the bank issued to the government to make cashing out of the bailout easier. Citi’s market value is $125 billion now. That is down $70 billion from November 2007 but about $125 billion above what many of us thought the bank was worth around this time two years ago. The reverse split, of course, has next to no bearing on the bank’s market capitalization, slashing the number of common shares by 10 while multiplying those shares’ value by the same factor (though in practice, reverse split shares tend to trade at a slight discount, at least initially). “Citi is a fundamentally different company than it was three years ago,” said CEO Vikram Pandit. For that at least we can be thankful. Also on Fortune.com: Treasury tiptoes toward housing exit Obama’s $89 billion Fannie-Freddie payday Fannie Mae: the long goodbye Follow me on Twitter at @ColinCBarr.