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Why 3-D Printing Software Maker Dassault Systemes SA's Stock Apparently Crashed 49% in One Day

This article was updated on Aug. 13, 2015.

Some shareholders in 3D printing software maker Dassault Systemes (NASDAQOTH: DASTY  )  got a huge jolt on July 23, 2014, when it appeared on Google Finance, Yahoo! Finance, and other top financial sites that their stock had plummeted 49% in a single day. I wrote soon after the close of the market on that day that they could rest easy, as Dassault had not suffered a massive sell-off, despite what their stunned eyes were seeing on their computer screens. The France-based company's stock had split 2-for-1 on that day, and that fact had not yet been reflected in the price-per-share data on the financial sites.

That news appeared nowhere on the financial sites, so I had to first assume -- we'll get to why I immediately made this assumption -- that it was a 2-for-1 split. After some investigation, I found the following on page 3 of Dassault's first-quarter 2014 earnings report released in March 2014:

The Board of Directors has scheduled the Annual Shareholders' Meeting for May 26, 2014 and is recommending a 4% increase in the annual cash dividend per share equivalent to €0.83 per share for the fiscal year ended December 31, 2013, compared to €0.80 per share for the fiscal year ended December 31, 2012 and a two-for-one stock split effective from July 2014. (emphasis mine)

A telltale sign of a split, or how not to be freaked out: Daily volume
This type of delay in financial sites reflecting stock splits isn't uncommon, especially when we're talking about foreign companies trading over the counter in the United States. A similar scenario played out earlier in 2014 with Sweden-based 3D printing company Arcam. In Arcam's case, the stock split was a less common 4-for-1, with the share price appearing to plummet about 70%. (The stock was up that day, which is why the drop was less than the 75% it would have been to account solely for the split.) According to comments on my Arcam article, some investors didn't know what was happening. So, I knew some Dassault Systemes investors could be just as panicked. 

If you ever see a huge drop in stock price, it will be almost surely be due to a stock split if the daily trading volume is just average. All the major sites list daily trading volume, as well as an average (usually a three-month average) trading volume.

Since the original version of this article was published, there have been no "real" big drops in Dassault's stock. In fact, it's been doing well -- its year-to-date 2015 return is 23% versus a mere 2.7% for the S&P 500. It's also beat the market over the last one-, five-, and 10-year periods, too. Look for more current coverage of Dassault Systemes coming soon.

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Read/Post Comments (6) | Recommend This Article (16)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 23, 2014, at 5:33 PM, wmarantz wrote:

    I came to the same conclusion after much web surfing (which revealed that the stock was, in fact, up about 1% today, and had a p/e of 17+.) So I didn't buy it.

    They don't even mention the 2-1 split on their bloody website!

  • Report this Comment On July 23, 2014, at 7:44 PM, TMFMcKenna wrote:

    Wmarantz,

    I understand your frustration. I don't know why companies don't make sure to release a quick PR a day or two before the actual split, so it's posted on ticker feeds, and quite visible on the Investors Relations sections of their websites.

    TMFMcKenna

  • Report this Comment On July 24, 2014, at 10:39 AM, PuddinHead42 wrote:

    If a stock "drops" 50% and there is no huge increase in volume, then you can be confident the stock is not crashing!

  • Report this Comment On July 24, 2014, at 11:27 AM, gospeljohn668 wrote:

    I nearly panicked when I saw that! Had I not been a moderately seasoned investor, I might have done something drastic. Fortunately I did my own digging (for about an hour), hoping all along it was a split, and then strangely remembered that I'd read something about that awhile back. I'm glad google and yahoo caught up, but I fear for the newbies/day-traders (which could have sent it even lower, especially if they had stop limits in place)! Even my online broker was showing a harsh loss in my account, and probably would have sold my shares if I'd had a stop order in place (fortunately, I don't typically use those either). Anyways, hopefully these lines of communication get cleared up in the future lest people accidentally sell their positions or make an uninformed decision.

  • Report this Comment On July 24, 2014, at 2:16 PM, kghagans wrote:

    They most certainly did mention the split on their web site. Read their news page carefully.

    "2014 full year outlook reaffirmed and EPS objective adjusted for two-for-one stock split"

    http://www.3ds.com/press-releases/single/dassault-systemes-r...

  • Report this Comment On July 24, 2014, at 5:15 PM, TMFMcKenna wrote:

    gospeljohn668,

    I'm sure you're not the only one who panicked. I just don't think investors should need to spend an hour, as you did, or even less time digging. In some cases, it's a given that there will be a delay in adjusting the price-per-share data on financial sites. So it would seem simply enough for cos. to post a reminder PR a day or two before that makes it onto ticker feeds.

    kdhagans,

    That item was posted today July 24 -- a day after the fact.

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