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.
Beth McKenna has no position in any stocks mentioned. The Motley Fool recommends Dassault Systemes S.A. (ADR), Google (A and C shares), and Yahoo!. The Motley Fool owns shares of Google (A and C shares) and Yahoo!. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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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