Have you wondered why do they change tiker symbol sometimes?
Did you get scared noticing your stock’s name changes right in front of your eyes?
Well, it’s a very common thing in the stock market. You may be able to see that even more than once during your trading experience.
It’s part of the trading market, if you hang on and read this post you will soon discover some of the many reasons that force stocks to change their tiker symbols.
Every stock is distinguished among the others by a name like everything else does. The same way every company has a unique name it does make sense that every stock has a unique name as well.
A stock’s name is also known as a tiker as you may already seen that in this introduction. A tiker is the symbol that every stock is known as; for example if your’e buying some shares from a stock you will see it listed as a symbol of some letters and even numbers.
It’s for nothing else other than to differentiate them from each other, which totally does make sense. Without a tiker we would not have any idea as of which stock is which. But with this name we’re able to look for any of them with just a click of a mouse.
AT&T is one of the few companies that has a one letter tiker symbol. It changed its stock name like all the others did, but due to confusion among investors the name was changed back to “T” which is very easy to remember and also not associated with any other company’s name.
But today the tikers are composed of many letters and even some numbers. In fact, the stock market are getting ready to enable tikers to be 8 letters long (Pretty complex, right?).
All this is because some of the tikers have so much resemblance. In order for us not to get confused they want to change that and distinguish them even more.
Oftentimes, a stock tiker symbol changes to another. You may wondering why does this happen, but it’s not difficult to understand at all. Keep reading and find why.
I’m going to elaborate with you in this post why do companies change their symbol and what can happen as a result of such a change.
Why do stocks change ticker symbol anyway?
There many different reasons that can force a company to change its ticker’s name. Most of them change it because they have to. They don’t usually change for no reason.
One reason that may see a company changes its symbol is due to a merger. Nowadays, companies merge with another every day. When that does happen there’s a need of changing the name of the purchased firm into a new one.
Most of the time the stock’s symbol does change as well because it’s a new company, they don’t want people to get confused with the symbol when they’re trading.
Another reason for stock’s symbol change is to distinguish it more from others. Some symbols look very similar to others, this can cause traders to follow one company instead of the other which may not be in the advantage of the company that’s not being followed.
You would not want that to happen to your company had you own one, would you? Well, that’s another reason for choosing to change a tiker symbol. It makes sense because it’s all about managing their business effectively.
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.
If a stock symbol has been changed it would not be kept secret from you for any reason, that’s would be a stupid idea anyway. The change is made for you and I, for us to be able to distinguish the stocks.
For this reason they ensure that everywhere they have their stock’s name listed is also updated so that their tiket’s name is shown correctly everywhere.
Some stocks change ticker symbol because…
They are no longer listed with the market through which they do their exchange. This may be voluntarily or involuntarily depending on the situation.
If a stock is not complying with the listing requirements it’s very easy to get this stock delisted. When that does happen the stock name is followed with a symbol such as .PK, .OB or .OTCBB.
In essence they become penny stocks if they were not. Once a stock is no longer listed it’s automatically trades as penny stock although the price itself may not fit within this specific market.
Some companies would change their name because they have gone bankrupt. This could be very bad for someone who owns shares with a company that has undergone into bankruptcy.
What does changing in stocks ticker symbol mean to us traders?
Changing in the name shouldn’t be a problem for us because nothing really changes with the stock. However, if the symbol was changed because a better company has acquired it, then we might see some changes for the better in this stock’s price.
On the other hand, if this stock was a blue chip and changes into a penny stock that would have been a different story.
Since we’re talking about penny stock in this context, a symbol change would not have much effect on us. Unless it’s a total scam.
There are many different things in penny stock trading that make us unconfortable investing our money. For many people, changing in stock symbols is one of them.
Although this may not be an issue most of the times, it does give us a reason to say alarmed because we can never be too sure.
Stocks change tiker symbols for many reasons. Some do it due to the circumstances they encounter while others do it to distinguish themselves from others.
If a penny stock change its tiker because the company was acquired by another, the holders should not be worried. But if it was changed due to bankruptcy that’s when it’s a problem to shareholders.
If you believe there’s a chance that you might lose your money through a stock name change, you should act quickly to sell your shares.
Have a company ever changed its stock tiker while you currently invested in this company? What happened afterwards?