What's In a Ticker Symbol? More Than You Might Think
What's in a name? For companies issuing shares on the open market for the first time via an initial public offering, the question becomes, "What's in a ticker symbol?"
The answer is: More than you might think.
Just recently, the popular Dave and Buster's -- the restaurant-and-arcade hybrid that some have referred to as "Chuck E. Cheese for adults" -- chose "PLAY" as its ticker symbol for its scheduled IPO. It joined many other companies by choosing a clever and amusing ticker instead of one based on its name or initials. (Dave and Buster's ultimately decided to cancel the IPO, citing unfavorable market conditions.)
It turns out, choosing an amusing ticker symbol isn't just an exercise in fun-and-games. It actually makes solid business sense. Several studies by researchers at Princeton and Pomona College have found that companies with clever or catchy ticker symbols tend to perform better.
There are plenty of companies that have come up with clever ticker symbols. Here's a review of some from the past and present.
- Some ticker symbols reflect people or processes related to the company, such as those of the "explosion metalworking" company Dynamic Materials (BOOM) and Peabody Energy (BTU). (BTU, short for British Thermal Unit, is a common energy measurement.) Molson Coors Brewing (TAP) probably doesn't need its ticker explained. The parent company of the Chili's restaurant chain is Brinker International (EAT).
- Some ticker symbols are simply cute and fun. Southwest Airlines' (LUV) ticker reflects the emotions and light-heartedness it hopes to inspire in its workers and customers. Its in-flight snacks and drinks were once called "love bites" and "love potions." Amusement-park company Cedar Fair (FUN) essentially has its mission as its ticker symbol. Want more? There's auction giant Sotheby's (BID), heart-monitor company CardioNet (BEAT), animal health specialist VCA Antech (WOOF), waste management company Progressive Waste Solutions (BIN), and National Beverage (FIZZ). Olympic Steel (ZEUS) incorporates Greek mythology's top god on Mount Olympus.
- Mergers have made it hard for some companies to keep their clever ticker symbols. Oakley, the maker of sunglasses, merged with Luxottica Group (LUX) back in 2007. Prior to that, though, Oakley traded under the very clever symbol OO. Get it? (Think about what a pair of sunglasses looks like.) Immucor is also no longer a stand-alone company, but the specialist in blood analysis for transfusions once traded under the ticker BLUD. Casino-machine maker Anchor Gaming traded as SLOT until International Game Technology (IGT) bought it.
- Some companies remain independent today, but with new ticker symbols. Harley-Davidson (HOG), for example, once went by HDI, and then switched to reflect the nickname of its machines.
- Some clever ticker symbols can be confusing at first. Consider semiconductor specialist Micron Technology (MU). The MU may not seem to make sense, until you realize that a micron, a tiny measurement equal to a millionth of a meter (semiconductors these days are quite small), is designated by the Greek character Mu. Meanwhile, AngloGold Ashanti (AU) takes its symbol from "Au," the atomic symbol for gold on the periodic table.
- Some ticker symbols may seem suboptimal. The Spain-based banking giant Banco Santander (SAN) traded in America with the symbol STD for quite a while. Then there's the oil and gas company Denbury Resources (DNR), which might not want to find itself on life support anytime soon.
- Exchange-traded funds have gotten into the act of coming up with amusing tickers, too, with the agriculture-focused Market Vectors Agribusiness ETF (MOO), ProShares Ultra Oil and Gas ETF (DIG), PowerShares Dynamic Food & Beverage ETF (PBJ), IQ U.S. Real Estate Small Cap ETF (ROOF), and the Global X Fertilizers/Potash ETF (SOIL), among many others.
You can follow Motley Fool contributor Selena Maranjian on Twitter here. She holds no position in any company mentioned. The Motley Fool owns shares of Denbury Resources. Motley Fool newsletter services have recommended buying shares of Southwest Airlines, VCA Antech, Molson Coors Brewing, Dynamic Materials, CEC Entertainment, and Sothebys. Motley Fool newsletter services have recommended writing covered calls on VCA Antech.