Do Clever Stock Tickers Attract Investors?

How much do you think the simple 1-4 letters of a stock ticker really affect the performance of a stock? The answer is a lot more than one would think…

At a superficial glance, investors know stock tickers, also known as stock symbols, as the classified name of the security or company under all investment exchanges. However, a clever stock ticker can be more than just a gimmick, as these simple letters can truly make a difference and immortalize a company on the stock market as a memorable security.

Do we have research that actually proves this to be true? The answer is yes, of course. A 2006 study from Princeton University psychologists highlights this hypothesis. These researchers found that stocks with easy-to-pronounce and memorable ticker symbols ended up performing a lot better directly in the days after they began trading.

Ok, so what, market and internet hype promoted company IPOs to boost the stock of the company, haven’t we heard of that before? Well, don’t get quite ahead of yourself; another study done by Ponoma College in 2019 verifies these findings, reporting that clever ticker symbols tend to perform better in the market due to their memorability to investors. Us common investors don’t have the ability to search through lines and lines of Bloomberg data on small-cap stocks to find high-performing potential, so memorable stock tickers really do help investors find new stocks to invest in.

Now that you are finally convinced let's look at some case studies. First, we can start with Donald Trump's social media platform, Truth Social, a platform that prides itself on free speech for conservatives. The former president created the platform after receiving bans from Facebook and Twitter after the Jan. 6 Capital Riot. The stock is set to go public after a merger with Digital World Acquisition Corp. Now, politics aside, can you imagine what the new ticker symbol will be when it begins trading on the stock market? DJT, standing for Donald Trump’s initials. That ought to be memorable, right?

This isn’t the only company playing the clever stock ticker name; let's look at some other examples:

• WOOF 🡢 Petco

• LUV 🡢 Southwest Airlines

• TAP 🡢 Molson Coors Beverage (Parent company to Blue Moon, Coors, and Keystone)

• EAT 🡢 Brinker International (Parent company to Chili’s and Maggiano’s)

• CAKE 🡢 Cheesecake Factory

• FIZZ 🡢 National Beverage (Parent Company to LaCroix)

• PLAY 🡢 Dave & Busters

• ZEUS 🡢 OLympic Steel Inc.

• FUN 🡢 Cedar Fair (Amusement Park Operator)

• HOG 🡢 Harley Davidson

If you are a large company planning to IPO in the distant future, definitely consider brainstorming up a creative stock ticker.