Why 3-D Printing Company Arcam AB (ADR) Stock Apparently Crashed Over 70% Today

Whenever you see huge drops and no news as to why, it might be due to an innocuous reason.

Jan 21, 2014 at 7:22PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis

I'd imagine some investors were greeted with a jolt today if they checked the share price of Swedish 3-D metals printing company Arcam (NASDAQOTH:AMAVF) on Yahoo! Finance and/or other online financial and trading sites. Most sites were showing the stock as down about 70% throughout the day, and in the red 73% at the market close. In reality, the stock was up considerably all day and notched a 7.8% gain when the trading day came to a halt. 

So what?
Investors who pay attention to company news releases, however, probably didn't bat an eye. They likely realized that Arcam's 4:1 stock split, which the company announced via a Jan. 16 news wire, had become effective, and financial sites had yet to update their data.A lag such as this is relatively common, especially when we're dealing with foreign stocks that trade as American depository receipts, or ADRs.

Now what?
As to the "missing" shares in brokerage accounts, Arcam investors should expect to see the correct number of shares in their accounts within a couple days. Typically, brokerage firms must wait until they physically receive the stock certificates from the transfer agent before they can be credited to investors' accounts.

As to the share price, today's 7.8% rise on no relevant news was pretty sweet. Most investors know that a stock's share price has nothing to do with its value. That said, there's often a psychological factor at play, with some investors perceiving greater value in stocks trading at lower share prices, as well as feeling "richer" when they possess more shares. So, it's not uncommon for a nice bump up in share price just after a stock split.

For stocks with low trading volume, however, increasing the number of shares can sometimes help with liquidity. Arcam is such a stock, as its three-month average trading volume (pre-split) is about 11,000 shares.  

The data is mixed on the results of stock splits on long-term stock price performance. So it's probably not a good idea to consider stock splits when making your investment decisions.

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Fool contributor Beth McKenna and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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