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Why Liberty Media Corp. Stock Is Down Today

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.

What: Shares of Liberty Media  (NASDAQ: LMCA  ) were being reported down 65% due to a virtual 2-for-1 stock split as the company today introduced new Class C shares trading under the ticker LMCK.

So what: In May, the media conglomerate said it would distribute two shares of Series C nonvoting stock to holders of LMCA and LMCB stock, thereby diluting the other shares by tripling the number of shares outstanding. Series A shares offer one vote per share while Series B offers 10 votes per share. Companies often create nonvoting classes of shares when they are interested in buying another company with stock. Earlier this year, Liberty expressed interest in acquiring Sirius XM Radio with Series C stock, but Liberty has moved on from that offer.

Now what: Though it may look scary to see your stock drop 65%, there is no change in the overall value of the shares due to the stock issuance, only a change in voting power. Liberty is known for making changes to its stock structure; the company recently announced a decision to split off a segment known as Liberty Broadband under its own tracking stock, which has not yet been completed. Expect more spinoffs and acquisitions from the company in the future, as Chairman John Malone is known for his deal-making.

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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 24, 2014, at 4:33 PM, rexob13 wrote:

    Geez... what you are talking about is called a 3-1 split. Sloppy math and journalism.

  • Report this Comment On July 24, 2014, at 4:41 PM, rexob13 wrote:

    Also your title is misleading. If the non-voting shares trade at the same price, your stock is actually up today... more than 1.6%.

    Change the name to the Sloppy Fool... this is a good way to alarm and mislead shareholders.

  • Report this Comment On July 24, 2014, at 4:45 PM, rexob13 wrote:

    Correcting my own slopiness. Your share value was up 1.6%. If the non-voting shares were at par with the old LMCA shares, holdings would have been up ~3%. The new shares appear to be around $47.35 in the after hours.

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Jeremy Bowman

Fool since 2011. I write about consumer goods, the big picture, and whatever else piques my interest. Follow me on Twitter to see my latest articles, and for commentary on hot topics in retail and the broad market.

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Related Tickers

8/28/2015 4:00 PM
LMCA $37.38 Up +0.26 +0.70%
Liberty Media CAPS Rating: ****
LMCK $36.40 Up +0.09 +0.25%
Liberty Media Corp… CAPS Rating: *****