An Open Letter To The Walmart Investor Relations Office


Dear Walmart Investor Relations,

We’ve heard of your “rollback” pricing program, but we didn’t think you meant to apply that to your stock price.  As you are probably aware by now,  your stock got hit by a mini-flash crash yesterday at 15:02pm.  Out of nowhere, the price of Walmart shares suddenly dropped from $75.70 to $71.69 on heavy volume of 400,000 shares.  There was no news to account for this 5.3% drop in your stock.

We realize that you probably are not watching your stock price every second of the day and you may have missed this event since your stock was back to trading at $75.50 within 3 seconds of the mini-flash crash .  But we can’t help but wonder if some of the Walmart executives asked why the low of the day in their stock shows $71.69?  Considering that many of these executives have options tied to your stock price, we’re sure that the $71.69 low must have raised a few eyebrows.  Were you able to explain what happened to your stock?  Did you call down to the NYSE and ask what happened to your stock?  We bet the explanation was that this was just a “fat finger” event caused by an isolated trade and that you shouldn’t be too concerned.

You may, however, be wondering how the specialist on the NYSE could have allowed these numerous trades to execute at such a low level. Surely, somebody at the NYSE must have noticed that there was a bad price attached to an order and would have tried to prevent these trades from occurring.  After all, you must be paying some hefty listing fees each year and you probably expect this kind of service for your stock.

Unfortunately for you, the trades in question did not occur on the NYSE.  There was no specialist to step in with a judgement call (but then again, there hasn’t been a specialist down on the NYSE floor for years).  Most of the trades occurred on an exchange called Direct Edge and on various dark pools (if you are not familiar with these terms, we recommend that you pick up a copy of “Broken Markets”  by Arnuk and Saluzzi, it’s a very informative book about how stocks actually trade today).   In fact, every day only about a quarter of the shares traded in your stock actually occur on the NYSE.  The rest of the shares trade across 12 other stock exchanges and across 40 different dark pools.  You see, today’s stock market is not so much about finding the proper valuation for your stock as it is arbitraging your stock price by high speed computers across these multiple trading venues.

We’d be happy to discuss with you further what we think happened to your stock yesterday.  We also have a list of questions that you may want to ask your listing exchange about.  Give us a call.



Your friends at Themis Trading