Yellow Media Inc (TSE:YLO) (PINK:YLWPF) stock price collapsed after the company decided to cut dividend rates.
YLO lost nearly half of its value over the latest trading session as the stock price tumbled down 43.3%, stopping at $1.10 per share. The fall in price generated the heaviest daily trading volume of the whole year. Nearly 39 million shares changed hands, which is a massive amount compared to an average turnover of just 4.8 million.
Technically, YLO stock collapsed after breaking down through support at psychologically sound $2 level. The price was sticking to a downtrend since the beginning of the year thus this was a seemingly natural outcome to expect. However, there was also news coinciding with the breakdown, which worked as a catalyst and made it far worse.
This morning the company announced dividend on their common stock for the third quarter 2011. This marked a move from monthly to quarterly dividend payments. Yellow Media said they will be paying $0.025 per share for the remaining two months of the third quarter, payable on October 17, 2011.
But what really got investors to jump the ship was a decision to reduce annual dividends altogether. The company cut them from $0.65 to $0.15 per year. Changes were also made to dividends paid to holders of various types of preferred shares.
The stock price hit multiyear low after the news came out and there are no tested support zones below the current level. The only thing traders can look at it the psychological support at $1 and there is no clue if it would actually hold at least for a while.
