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What Happens When a Stock Symbol Changes Its Name?

Original post by Eric Feigenbaum of Demand Media

Stock symbol changes can stem from mergers and rebranding.

A stock symbol, also know as a ticker symbol, is an abbreviated representation of a company's stock. The Securities and Exchange Commission developed the Intermarket Symbols Reservation Authority to create a unified system of symbols across American stock markets. Initially symbols were one letter long and over time grew to three and eventually five, and include numbers as well. Today, NASDAQ is preparing to allow up to eight letters per symbol to make room for market expansion. Companies change their symbols for a variety of reasons including mergers, company name changes and to distinguish themselves from other stocks.

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Traders

A stock symbol change is largely intended to make a distinction among stocks and to help traders ensure they are exchanging the correct shares. Therefore, a symbol change gets updated in online registries, stock guides and professional databases. Although today most professionals use electronic information and guides to assist them, those who hang on to paper stock guides must regularly get new editions to make sure they have accurate information.

Impact

The change of a stock symbol in and of itself has no specific value or meaning. A change may have little consequence to anyone. Changes frequently occur among companies newer to stock exchanges. This also occurs if a company wants trying to find a symbol that has better distinction and name recognition. Changes don't usually disturb trades or markets.

Investors

Like names themselves, stock symbols can affect the way investors view a company. Share prices are largely a reflection of investor perceptions about a company; a changing symbol can be a small part of a larger change in a company. For example, a merger usually leads to the acquired company dropping its stock symbol in favor of the purchaser's.

Confusion

Blue chip companies with long histories rarely change their ticker symbols. However, when they do, it can create confusion for a long time afterward. For example, AT&T, which is one of the oldest stocks in America, changed its symbol after 30 years from T to ATT. Investors had long known the company by T and the change created some confusion and AT&T felt the T symbol carried more prestige. AT&T eventually returned to the original T symbol largely for continuity and tradition's sake.


                   

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About the Author

Eric Feigenbaum started his career in print journalism, becoming editor-in-chief of "The Daily" of the University of Washington during college and afterward working at two major newspapers. He later did many print and Web projects including re-brandings for major companies and catalog production.

Photo Credits

  • Comstock/Comstock/Getty Images


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