Companies must check off a few things on their checklist before they start to trade publicly on an exchange. The first is to file the proper paperwork with the Securities and Exchange Commission (SEC) including Form S-1—a requirement by any company that wants to list.
The ticker symbol is what identifies a company, setting it apart from others that trade on the same exchange. But what happens if the ticker symbol changes? Read on to find out more about why symbols may change and what you need to do if it does.
Key Takeaways
- A ticker symbol is the grouping of a specific set of characters that represent and identify a public security listed on an exchange.
- The ticker symbol of an acquired company usually changes to the acquirer's after the completion of a merger.
- A company that changes its name may change its ticker.
- When companies are delisted from their exchanges, the symbol changes.
- Investors don't need to do anything after a ticker symbol changes.
What Is a Ticker Symbol?
A ticker symbol is the grouping of a specific set of characters, usually letters, that represent and identify any type of public security that trades on an exchange. Symbols are unique, allowing investors to research and trade shares in the companies they represent.
Every security that is listed has a ticker symbol, which is chosen by the company before it lists on an exchange. Although the symbol may be an abbreviation or other equivalent of the company's name, this isn't a requirement.
The ticker symbol system was created and standardized by (S&P) and is used by every major exchange in the world. Companies that trade on the New York Stock Exchange (NYSE) have ticker symbols with three letters, while those listed on the Nasdaq have four letters.
My Ticker Changed!
Ticker symbols help investors identify companies when they're doing research or making trades. But, like everything else, these symbols aren't always static. They can change for several different reasons:
- The company merges with another corporation
- The company changes its name
- The company delists from its exchange
Ticker symbols aren't static and can change in the event of a merger, name change, or delisting.
Mergers
Mergers take place when one company acquires another one. Since they combine to form one new entity, they can't both trade on the exchange. So what happens to the two ticker symbols? When two companies merge, the entity being acquired usually gives up its ticker symbol in favor of the acquiring company's symbol. Corporate actions such as mergers can often be positive for a company, especially if the company is taken over for a premium over the share price.
Name Changes
A ticker symbol may change because the company changes its name. A company name change generally doesn't mean much to its operations, though investors may interpret it as positive sign if it reflects a positive change in the company's overall strategy. Here's an example. When AOL Time Warner dropped the AOL and became simply Time Warner, it changed its symbol from AOL to TWX.
Delisting
If a ticker symbol has letters added to it such as .PK, .OB or .OTCBB, this means the stock is delisted. No longer trading on the original exchange, it's on the less liquid and more volatile over-the-counter market. More specifically, a .PK indicates that your stock now trades on the pink sheets, while.OBor .OTCBBrepresents the over-the-counter bulletin board.
A stock that has been delisted is like a baseball player sent from the major leagues to the minors. For some reason, the stock is no longer worthy of trading on a major exchange, perhapsbecause it failed to maintain the exchange's requirements.
Most companies that are listed on the Nasdaq have four-letter ticker symbols. But there are instances when the exchange adds a fifth letter. This letter tells investors something important about the company. Two of these letters are no longer used. For companies that entered bankruptcy proceedings, had a "Q" added to the end of the ticker. It also made changes when companies were delinquent with their SEC filings by adding an "E" tothe end. The Nasdaq ended this practice in Jan. 2016, and now uses theFinancial Status Indicator to denotedelinquent regulatory filings or bankruptcy proceedings.
What to Do if Your Stock's Ticker Changes
A ticker symbol change really means nothing to you, the investor, in the grand scheme of things. The change doesn't do anything to markets or to the way you execute trades. Since everything is electronic, your trading platform or broker will already update your portfolio to include the new ticker symbol.
FAQs
Key Takeaways
Why do some stocks fluctuate so much? ›
Stock prices change everyday by market forces. By this we mean that share prices change because of supply and demand. If more people want to buy a stock (demand) than sell it (supply), then the price moves up.
How much do investors trade because of name ticker confusion? ›
Up to 25% of companies with similar tickers/names exhibit co-movements in turnover. This co-movement is due to investor confusion. Trades made by mistake contribute to 5% of the trading turnover.
How did the stock ticker work? ›
Stock tickers were a special type of telegraph receiver designed to print an alphabetical company symbol and the current price of that company's stock on a paper roll called ticker tape.
What happens when a stock changes on exchanges? ›
Changing exchanges can have different effects on shareholders in general, mostly around liquidity (the ability to buy/sell easily), and the change of listing may affect price indirectly as the investor base changes (which seems to be the motivation for this specific listing change), but there is no direct effect on ...
What is it called when a stock fluctuates a lot? ›
Volatility: When a security, a commodity or an index fluctuates wildly in a short period of time, they're experiencing volatility.
Which stocks fluctuate the most daily? ›
Most volatile Indian stocks
| Symbol | Volatility | Price |
|---|
| QUASAR D | 23.02% | 15.02 INR |
| SGL | 23.01% | 21.38 INR |
| SATCH D | 22.56% | 4.78 INR |
| MMACOBSTECH | 22.21% | 136.00 INR |
30 more rowsA ticker symbol change really means nothing to you, the investor, in the grand scheme of things. The change doesn't do anything to markets or to the way you execute trades. Since everything is electronic, your trading platform or broker will already update your portfolio to include the new ticker symbol.
What are the biggest mistakes a trader should avoid in stock trading? ›
Top 10 common trading mistakes and how to avoid them
- Not researching the markets properly.
- Trading without a plan.
- Over-reliance on software.
- Failing to cut losses.
- Overexposing a position.
- Overdiversifying a portfolio too quickly.
- Not understanding leverage.
- Not understanding the risk-reward ratio.
For a specific stock mark, tickers are unique and identify specific stocks or shares of a company. The same ticker code may, however, represent different companies on different exchanges.
Usually, a company can pick its own ticker symbol. If it already exists, they must choose another one. If they don't pick one, the exchange will assign them a symbol. The ticker symbol is usually representative of the company's name, for example, AMZN for Amazon or MSFT for Microsoft.
What is the one ticker strategy? ›
One Ticker Trader is Larry Benedict's weekly trading service where he picks a single stock or theme for the month and recommends up to three trades on it.
How does ticker work? ›
How does Ticker use my device data? We use the data collected by the device to: Verify the insurance details you gave us Work out how you drive Calculate your renewal quote Ask seriously risky drivers to leave Doing this means we can attract the kind of...
Do I lose my money if a stock is delisted? ›
Though delisting does not affect your ownership, shares may not hold any value post-delisting. Thus, if any of the stocks that you own get delisted, it is better to sell your shares. You can either exit the market or sell it to the company when it announces buyback.
What happens if a stock is manipulated? ›
Market manipulation is when someone artificially affects the supply or demand for a security (for example, causing stock prices to rise or to fall dramatically).
Why do stocks change? ›
Stock prices are driven by a variety of factors, but ultimately the price at any given moment is due to the supply and demand at that point in time in the market. Fundamental factors drive stock prices based on a company's earnings and profitability from producing and selling goods and services.
Why do some stocks stay the same price? ›
The answer is that stock prices are indeed determined by supply and demand. If you see no change in price when you trade, it is because the amounts you are trading are relatively small.
Why do penny stocks fluctuate so much? ›
A Risky Proposition
Low-priced securities often are considered speculative investments, which you should only make with money that you can afford to lose. They tend to be volatile, and they trade in low volumes, which means they're subject to price fluctuations from even relatively small trades.
Why do stocks go up and down together? ›
In the short term, stocks go up and down because of the law of supply and demand. Billions of shares of stock are bought and sold each day, and it's this buying and selling that sets stock prices.
What is the main cause of fluctuations in stock prices is changes in? ›
The law of supply and demand holds true as in any market. Some factors, such as the rate of inflation, have the power to move the market as a whole higher or lower. Other factors, such as corporate earnings, may move a single company or an industry sector.
