Rohm (OTCPK: ROHCY) stock should drop 75% today. This is a purely technical move, not a real price change. That is, it’s the nominal price that’s going to change, not the real one - the value of the company doesn’t change, just the value of each piece of paper that makes it up. This is, of course, a stock split. This is not something new either, it’s been known about for months.
The announcement:
There’s not that much trade in Rohm in New York, we agree. But there’s a reason for our interest here. Over and above the observation that stock markets do have this fashion, that there’s a “right” range for a stock price and managements will alter numbers of shares in issue to try to get the price into that range.
Rohm stock price from Google Finance
The fun here, we think, comes from the herd behaviour of Japanese companies. For today seems to be the day for stock splits. We don’t even pretend to have all of the numbers, but among those we can see we’ve around 100 stock splits happening on the same day. A few are reverse stock splits but most are forward. Companies deliberately reducing their nominal - but not real of course - stock prices.
There always are a few stock splits on any one day but a more normal numbers is 15 to 20. And some of those are going to be the same stock splitting on different markets and quotations. Which is also something happening here. Some of the larger Japanese companies have 5 and more quotes on different global markets.
We just think that it is interesting that so many companies are doing all their splits on the same day. That Japanese instinct for herd behaviour coming through. Not that this is terribly important, we just think it interesting - just one of those things to learn about stock markets.