Bank of America Drops to 52-Week Low: Does it Need More Capital?

Bank of America shares dropped to a 52-week low during early trading on Tuesday, as the company saw its stock drop more than five percent at times.

The Charlotte-based banking company's stock price has taken a beaten lately, as its purchase of mortgage lender Countrywide Financial proves to be a worse and worse decision every day. The company put aside upwards of $30 billion to deal with Countrywide, but it hasn't stopped the company's slide.

On Monday, a Jeffries & Co. analyst noted that Bank of America may need to raise $40 to $50 billion in new capital, though Bank of America CEO Brian Moynihan has resisted past calls for the company to raise fresh capital.

"Our traders and desk strategist think the reality is that the market is forcing BAC into a capital raise, and the lower the stock price goes, the worse it gets," said Jefferies analyst Layla Peruzzi in a note. "The math they came to get BAC to Basel I [tier-1 capital] in line with [Citigroup's] they need about $40-$50 (billion)."

Henry Blodget went even further, stating that the company could need as much as $100 to $200 billion in new capital. A Bank of America spokesman denied these claims.

"We have more than enough capital to run our business and run our strategy," Bank of America spokesman Jerry Dubrowski told The Wall Street Journal.

Bank of America has been unable to truly rebound from the financial crisis of 2008, and currently has the worst share price of the four major banks. It also faces major lawsuits, including AIG's $10 billion lawsuit that alleged Bank of America committed fraud. Some investors, like The Motley Fool's Matt Koppenheffer, still see value in the company but a lot of that is based on if it can reach its potential.

"In terms of value it's a really tough call," Koppenheffer told IBTimes. "The reason I bought a small position was that it simply is trading at a small fraction of its reported book value. But what does its book value really mean?"

"The best thing about Bank of America is it could be a flyer," he added.

As of 10 a.m., Bank of America's shares were trading at $6.11, down 4.83 percent.