Novo Nordisk (CPH: NOVO-B) (OTCPK: NONOF) (NYSE: NVO) stock will drop 50% today. But it’s only the NVO stock that will halve in value - the other two quotes sank last week. It’s rather odd to do different quotations at different times but this is what the company decided to do so there it is. This is also a purely technical change, it’s not a real loss of money to anyone. Finally, this isn’t a sign of some weakness or problem, this is a signal of success at NVO.
The particular detail is as we’ve put it before about Novo Nordisk: “The stock is simply getting “too expensive” therefore something must be done about that. However, what complicates is that the Danish quotation changes today. That’s the CPH quote there. The OTC quote is a broker organised trade of that Danish stock in New York. So, that will also change today. However, the NYSE quote, NVO, is the company’s own ADR. This doesn’t change until next week.
All of which is a bit confusing but that’s the way they want to play it: “Novo Nordisk’s B shares are listed on Nasdaq Copenhagen in trading units of DKK 0.20 and its ADRs that equals B-shares of DKK 0.20 are listed on New York Stock Exchange (NYSE). In order to secure liquidity for both the Novo Nordisk B shares and American Depositary Receipts (ADRs) and bring price levels in line with market practice for especially the ADRs, the Board of Directors has decided to split the trading units in a two-for-one ratio.The trading unit of the Novo Nordisk B shares listed on NASDAQ Copenhagen will be changed from DKK 0.20 to DKK 0.10 as of 13 September 2023. The ADRs listed on the New York Stock Exchange (NYSE) will similarly be split as of 20 September 2023 to ensure that the ratio of B shares to ADRs will remain 1:1.””
That was last week, when the CPH and the OTC quotes changed. Now we’re in that future, our present, when the NYSE and NVO quote changes.
Novo Nordisk stock price from Google Finance
The reason as it is put in that quote from the corporation there. There are price ranges which markets consider “right” for a stock. In the US markets that’s usually in the $10 to $100 range. So if you do really well - and Nordisk obviously has, Oezimpic and all that - the stock price rises above that range. People start to think of it as expensive. So, it might be possible to juice interest by cutting the nominal price. Making people think that it’s not so expensive after all.
Yes, this is all a bit silly because we should be able to see through nominal prices like this. But humans are subject to the number illusion, that’s why prices are 99 cents, $39.99 and so on. We’re not wholly and entirely rational when it comes to numbers.
Novo Nordisk stock, the New York quote, will halve in nominal value today. Everyone will also own twice as many as they did yesterday. This is a purely nominal and technical price change, not a real one.