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I noticed that the price history of AT&T stock (T) prior to April 11, 2022 is about 25% lower today than it was a week ago. That is to say that when I click on my favorite financial websites and view the price history, viewed on April 8, 2022 I see it trading around $23 that day. Viewed on April 15, 2022 I see April 8, 2022 trading around $18. I noticed because I purchased shares prior to that date, and I know how much I paid and when. The date of change (April 11, 2022) seems to coincide with the completion of a merger and I guess that it is somehow related, though it isn't obvious to me why or how this could change history.

  1. Is it routine for historical data to be changed as a result of a merger?
  2. Excluding splits, are there any other events by which historical data may be altered?
  3. Who benefits by this alteration of historical data?
  4. Is there a mechanism by which investors may easily view the date and magnitude of such adjustments (the raw data)?
  5. What, if any, events would cause the historical data to be revised upward?

edit: questions 4 and 5 added

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  • You should have received some shares in the new company., along with the decrease in T share price. (I did; Vanguard adjusted everything for me.) The activities were zero sum.
    – RonJohn
    Commented Apr 15, 2022 at 14:28
  • @RonJohn That is indeed the case: zero sum. I find the alteration of the historical data puzzling nonetheless.
    – regularguyprobably
    Commented Apr 15, 2022 at 15:29

2 Answers 2

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Is it routine for historical stock price data to be revised?

Yes. In fact, this happens not just for mergers, but also for dividends, stock splits, and spinoffs.

Excluding splits, are there any other events by which historical data may be altered?

The most common occurrence is when a company pays a cash dividend. If you are looking at a dividend-adjusted price chart, then its historical prices have been adjusted to remove the sudden drops in prices on the ex-dividend dates.

Who benefits by this alteration of historical data?

There are uses for raw prices (unaltered data), but for the vast majority of people who use price charts for analysis, the adjusted data is more useful because it makes the current data more comparable to the past data. For example, if a company does a large spinoff, its stock price will decrease. If you only look at the raw prices, it would seem that the investors lost a lot of money from the "crash". The price adjustment is meant to present a more accurate picture of investment performance.

Formulas used for adjustments:

What, if any, events would cause the historical data to be revised upward?

A reverse stock split (a.k.a. share consolidation) would cause the historical data to be revised upwards. Refer to the adjustment formula and example calculation in the link above (section: "Reverse Stock Splits").

The date of change (April 11, 2022) seems to coincide with the completion of a merger ...

What happened was that AT&T spun off a subsidiary (WarnerMedia), and merged that subsidiary with Discovery Inc. to create Warner Bros. Discovery Inc.

Sources:

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  • How exactly is adjusted data more useful for chart analysis? As a member of the vast majority that you describe, I prefer to look at the chart and see that about a year ago T was trading above 30 (not to mention, that's what actually happened in real life). What everybody sees today is that a year ago it was about 24 or 25. I'm curious how this is more useful to me (or anyone).
    – regularguyprobably
    Commented Apr 16, 2022 at 16:30
  • If you owned 100 shares at $30 a year ago and now own 125 shares at $27 - which would make more sense looking back - thinking your 125 shares were worth $30 or $24? Most stock charts adjust the price so that you can see the change in total value of a stock position, which is adjusted for dividends and splits.
    – D Stanley
    Commented Apr 16, 2022 at 19:01
  • Is it weird to want to see a chart of the actual prices at which a security changed hands? I would've thought it would be much more commonplace.
    – regularguyprobably
    Commented Apr 16, 2022 at 21:33
  • How exactly is adjusted data more useful for chart analysis? If there's a split or a special dividend, the price drop causes a gap in the graph. Since it's a zero-sum event, the gap is removed so that the continuity of price remains. This is important essential to chartists employing technical analysis.
    – Bob Baerker
    Commented Apr 17, 2022 at 0:24
  • @regularguyprobably intraday charts are not the actual order of events anyway. Large orders happen "off the tape" and are inserted after they are complete. The end of day price is usually the last trade, but technically, it is the last trade where there was no order imbalance in the order book. The closing price is not always the very last trade, but it is usually close to it.
    – Dave Harris
    Commented Apr 18, 2022 at 3:49
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There's nothing nefarious going on here. When a company does a spin off, the shareholder receives shares in the spun off company. The share price of the parent company drops by the value of the new company.

While this was part of a merger, the spin off was a separate action.

Yes, it is routine for historical data to be changed as a result of a spin off. Share price is also adjusted for common as well as special dividends.

There is no immediate benefit to the spin-off. It's a zero-sum event.

The magnitude of the data adjustment is known from the public information detailing the terms of the spin-off. It can also be viewed in the historical data where adjusted share price info is provided (for example, see Yahoo Finance).

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    When I view the historical data on Yahoo Finance, I don't see a closing price of $23.41 for April 8, 2022 ($23.41 being the actual close price for the day). The close listed is $18.23.
    – regularguyprobably
    Commented Apr 15, 2022 at 22:32
  • The Yahoo data has been adjusted twice, once for the spin off and once for the subsequent dividend.
    – Bob Baerker
    Commented Apr 16, 2022 at 11:09
  • Right, which brings me back to question 4 above. Where do I go to see a $23.41 close on Apr 8?
    – regularguyprobably
    Commented Apr 16, 2022 at 16:00
  • You know what T closed at on Apr 8th so that's where you see it. If you're asking how to reverse engineer the adjusted prices to get that $23.41 value, you're going to have to hope that someone else offers the solution or you're going to have to do some reading about that. I have long since forgotten the mechanics of it. At some point in the past, I can across a web site that offered charting and one of the choices was to graph unadjusted prices. It's out there but I don't recall the name
    – Bob Baerker
    Commented Apr 17, 2022 at 0:21
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    @regularguyprobably you can purchase the unadjusted data from CRSP and it provides a separate entry for the conversion factor for each date.
    – Dave Harris
    Commented Apr 18, 2022 at 3:51

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