Why is DDD down so much today ? (3-D Systems ) What does 3:2 Stock Split mean? Feb 25th , 2013

update: May 9th , 2013 : if you trade options look how Rob ( @stockdarts ) a contributor to our Stockguy22 Bull and Bear weekly newsletter doubled his money on a DDD earnings option play : GREAT JOB Rob –great strategy and recap here: http://stockguy22.com/2013/05/08/doubled-money-ddd-earnings/

I’ve ( Stockguy22) also done fantastic on trading DDD and SSYS recently :

as of May 3rd I locked up profits on 1/2 of DDD and SSYS for 36.07% and 14.04% avg returns . I plan to add back the portions I sold on any summer dips but plan to keep some longer term as I like this sector as you can see from my detailed report below:

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Why is DDD  down so much today ? (3-D Systems ) Feb 25th , 2013

as some of you know this is one of the stocks that we are looking at in the 3D Printing industry :

DDD, along with SSYS , XONE etc.

What caused the drop on DDD today ? A few things happened today

1) DDD had earnings : http://www.bloomberg.com/news/2013-02-25/3d-systems-falls-after-quarterly-revenue-trails-estimates.html?cmpid=yhoo

8:44AM 3D Systems: Beats by $0.01; misses on rev; guides FY13 EPS and rev including Geomagic acquisition (DDD) 37.97 : Reports Q4 adj. EPS of $0.39 vs. the $0.38 consensus; rev +45% to $101.6 mln vs., the $103.9 mln consensus. Stronger printer demand bolstered quarter-end backlog to $11.4 million at year-end, a 23% sequential increase, which included $3.2 million related to current printers’ sales. Gross profit increased 60% and gross profit margin expanded 460 basis points to 51.7% contributing to non-GAAP net income improvement of 64% over the 2011 quarter.

Co sees FY13 adj. EPS (on a post slit basis, including the Geomagic acquisition, expected to close in 1Q13) of $1.00-1.15 vs. the $1.06 consensus (not clear if comparable); rev $440-485 mln vs. the $445.9 mln consensus. “We entered 2013 with positive sales momentum shaped by increased demand from advanced manufacturing activities. While we may face lingering economic uncertainties in parts of the world, we expect to continue to benefit from robust R&D and manufacturing spending by our customers worldwide.”

 

2) DDD had a 3:2 Stock Split – What does a 3:2 Stock Split mean?

they had a 3:2 Stock Split which means if you owned 100 shares of stock you now have 150 shares but the price also dropped from Friday’s close so no real change in the total amount of money you have into this position but sometimes Stock splits can fool some new traders and that could explain some of the extra crazy volatility on DDD today. 

split adjusted price as of Friday close is $37.97 ( the close Friday was pre split $56.96 )

So if you owned 100 shares of DDD @ $56.955 would be worth : $5,695.50 on Friday Feb 22nd

Based on new shares you would now have 150 shares of DDD @ $37.97 so that was also worth : $5,695.50 on Friday Feb. 22nd.

As you can see no difference – $5,695.50 but is down today 6% + as of this blog post to $35.57 so that’s why if you owned it , you would see it down on your account.

The 3:2 Split had no impact expect for the volatility in today’s pricing action which was mostly due to with some panic selling on the earnings news initially then market related pullback in the afternoon.

here are 2 charts below on DDD to show the movement today : a daily chart and a 10min chart so you can see premarket action on DDD

Hope you found this helpful

Stockguy22

 

updated : Mon Feb 25th , 9:48pm

Someone asked me a good question re: DDD : did the people that bought last week on DDD get hosed?

What happens if I purchase or sell shares DDD after the record date but on or before the mailing/payable date?

  Shareholders are generally entitled to receive the shares from the stock split if they own or purchase shares up to and including the payable date (Feb 25th , 2013).

  • If you had purchased your shares between the record date (Feb 15th, 2013 ), and the payable date (Feb 22nd , 2013), you are entitled to receive the shares from the stock split.
  • If you had sold your shares between the record date (Feb 15th, 2013 ), and the payable date (Feb 22nd , 2013), you are not entitled to the split shares on the shares you sold.
 
Overall though it doesn’t really matter since will not affect your profit & loss
 The transaction is not meant to make people lose or make money.
Sometimes psychology plays into it .I remember trading stocks in the late 1990’s that got splits announced and we would play them into the split date since they would run up  ..many times was 2:1 or 3:1 .. and then play them after the split is announced since many times they would continue higher since the stock was now more affordable to traders after the split. 

 

 DDD 3:2 Split charts

 

 

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