What Is a Stock Symbol?

by Shelley Moore
What Is a Stock Symbol?

A stock symbol is a short series of letters identifying a security which trades publicly, such as a stock on the New York Stock Exchange. Usually the symbol is an abbreviation for the company name, such as F for Ford, IP for International Paper, JCP for J.C. Penney, and GOOG for Google. The symbol is commonly called a ticker symbol.

Types

When a company begins issuing shares of stock for public trade, its management chooses an available symbol which investors then use to place their buy and sell orders. The oldest exchange, the NYSE, uses symbols between one and three letters, and the American Stock Exchange also uses three letters. The National Association of Securities Dealers Automated Quotation system symbols have four letters.

History

Stock symbols have been called ticker symbols since the 1800s, when telegraphs transmitted prices that were then printed onto a narrow ribbon of paper at about one character a second. People called this strip of paper a ticker tape because the machine made a ticking sound as it printed. Corporate names were abbreviated because the telegraph had extremely low bandwidth, and businesses could save money by transmitting fewer letters.

Time Frame

Even today, when paper ticker tapes have not been used since the 1960s and the information runs across the bottom of television screens, the abbreviated symbols are still used to save space, and as a convenient and traditional way of identifying a company. Professional traders often have memorized hundreds of ticker symbols just in the course of their everyday work. In addition, upward price movements are called upticks and downward ones downticks.

Significance

The ticker symbols can become very significant when the corporation is known more by its symbol than its actual name. Minnesota Mining and Manufacturing (MMM), for example, was commonly referred to on Wall Street as 3M, a name which the public embraced. In 2002, the company officially changed its name to 3M.

Features

Sometimes a company chooses to present itself in a different way. In 2007, Sun Microsystems, Inc. (SUNW), changed its stock symbol to JAVA, for its ubiquitous programming language. The announcement on the Chief Executive Officer's blog created a bit of an uproar, with over 350 comments about the decision, most negative.

Effects

Some companies on the exchanges dissolve, merge, or go bankrupt, and are either eliminated from the exchanges or take up new symbols. At that point, their previous symbol becomes available for another corporation to take. For instance, Citigroup claimed the one-letter symbol C relinquished by Chrysler when that company merged with Daimler and became DCX.

Considerations

In 2008, the available symbols I and M are being held for Intel (INTC) and Microsoft (MSFT), companies with highly-significant trading volume, in expectation they will soon move from the NASDAQ to the NYSE. Moving between exchanges is not unprecedented, with companies such as E-Trade beginning on the NASDAQ as EGRP, moving to the NYSE in 2001 as ET, then back to the NASDAQ in 2006 as ETFC.

About the Author

Shelley Moore is a journalist and award-winning short-story writer. She specializes in writing about personal development, health, careers and personal finance. Moore has been published in "Family Circle" magazine and the "Milwaukee Sentinel" newspaper, along with numerous other national and regional magazines, daily and weekly newspapers and corporate publications. She has a Bachelor of Science in psychology.

Photo Credits

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