Boliden (STO: BOL) shares will fall 50% or so at open today but don't worry, seriously, don't worry. All holders should also have twice as many shares at open today. This is a purely nominal change in the share price therefore. The real price change will be however much the price changes by other than that 50%.
What is happening is that rarer type of share split, the forward one. Everyone who had one share yesterday should have two this morning. The value of the company as a whole hasn't changed, the value of any holding in Boliden hasn't changed. Just the number of shares in issue has doubled and therefore each one should, logically, be worth half as much. The reason that this is the rarer type of share split - as opposed to the reverse one - is that this is a signal of past success at the company. They've done well enough that the share price has risen so high that people think it's “too high”. So, to increase the marketability, reduce that nominal price to get around that number illusion that humans are prey to.
Boliden stock price from Google
As we know the reverse stock split is common enough (there are a number today) but they're usually a sign of past failure and are designed to drag the share price up. Here the aim is to deliberately lower it.
The ISN number for Boliden changes as a result, but otherwise nothing much else should do.
We should also note that Boliden has a habit of this, doing something similar a year back. Except back then only one share stayed quoted, the other was bought in by the company at a fixed price. That was a way of producing a special dividend. Here, today, there is no such arrangement. Just a doubling of the shares in issue.
So, why bother to do this? Well, it just is true that humans see numbers in a slightly odd way. We have ranges which we think are “right” for something. If the nominal price for something is higher than that range then we think “Ouch, that's expensive”. If that happens to a stock price then that nominal price can get out of line with a more careful valuation. So, change the number of shares in issue to get the price per share back into that “correct” range as determined by human nature.
