Impact on price
Because the new ADS will now bundleâŻ20âŻtimes more ClassâA ordinary shares (4800âŻvsâŻ240), the quoted price of one TC ADS should fall to roughlyâŻ1/20âŻof its preâsplit level (ââŻ5âŻ% of the old price) on the effective date. In practice the market will âresetâ the price at the old level multiplied byâŻ240/4800âŻââŻ0.05, so a US$50 ADS today would trade aroundâŻ$2.50 immediately after the change. The adjustment is purely mechanical â it does not reflect a change in the companyâs valuation â but the sudden 95âŻ% price move will create a shortâterm, purely priceâbased volatility spike.
Impact on trading volume
The consolidation makes each ADS far more affordable for retail participants and aligns the shareâcount with the much larger underlying equity pool. Historically, such denomination changes draw in new buyers (retail & smallâcap desks) and trigger algorithmicâmodel reâbalancing, so volume normally surges for a few days surrounding the âeffectiveâ date. Expect a noticeable uptick in dailyâaverage volume, especially if the preâsplit price was at a psychological barrier (e.g., $40â$45). However, the underlying liquidity of the ordinary shares does not change, so once the mechanical adjustment is absorbed, volume will settle back to its historical level.
Trading takeâaways
| Time frame | Action | Rationale |
|---|---|---|
| Preâeffect (nowâuntilâŻAugâŻ29) | Trim position or hedge if youâre shortâterm âlongâ â the price will likely drift down as markets priceâdisclose the split. | Anticipate a predictable ~â95âŻ% price adjustment; a smallâscale runâup or runâdown can be caught with tight stops. |
| Onâeffect (dayâŻ1â2) | Use a tightââstopââloss or a volatilityâscaled entry to capture the expected bounce back if the stock has been oversold after the mechanical drop. | The price will momentarily overshoot the 0.05 factor, then revert to the adjusted trend line; volatility will be elevated. |
| Postâeffect (3â7âŻdays) | Assess if the broader trend (upâtrend / downâtrend) holds; consider scaling in if the relativeâstrength index (RSI) and movingâaverage convergence (e.g., 10âday EMA > 20âday EMA) stay intact. | Once the split is âpricedâin,â the normal technical picture returns; higher volume can confirm trend continuity. |
In short, the ADS ratio change will force a ~95âŻ% price drop on the first trading day and typically boost volume for a short window. Positionâsize modestly, protect against the steep mechanical move, and look for a rebound if the stockâs fundamental momentum remains bullish.