What is a Ticker Symbol?
A stock ticker symbol, also known as a stock symbol or ticker, is a unique series of letters assigned to a security for trading purposes. It’s basically a shorthand way of describing a company’s stock. Stocks listed on the New York Stock Exchange (NYSE) can have up to four letters, while Nasdaq-listed securities can have up to five characters. The number of letters in the symbol doesn’t make a significant difference. It’s just a way to identify the company’s stock quickly and easily.
Understanding Ticker Symbols
Back in the 1800s, when modern stock exchanges were born, floor traders had to verbally communicate the stock price of a company by saying or writing out its full name. As the number of publicly traded companies grew, this process became time-consuming and couldn’t keep up with the fast-changing prices. So, they shortened company names to one to five alpha symbols. Today, we still use stock tickers, but they’re displayed digitally instead of on ticker tape machines.
Ticker symbols are especially useful when companies have similar names or are spin-offs of the same company. For example, Citigroup and Citizens Financial Group have similar names but are not affiliated with each other. Citigroup trades under the ticker symbol C, while Citizens Financial Group uses CFG. In November 2015, Hewlett-Packard split into two separate companies, Hewlett Packard Enterprise (HPE) and HP Inc. (HPQ), with different focuses and market sizes.
Types of Ticker Symbols
Depending on the company’s shares and class structure, ticker symbols can include additional letters or suffixes. For preferred stocks, “PR” and a class letter are typically added to the symbol. If a company has different classes of shares with varying voting rights, the symbol may indicate whether the shares have voting rights or not. For example, Alphabet Inc. uses two ticker symbols, GOOG and GOOGL, to differentiate its shares with and without voting rights.
Other types of ticker symbols are used for mutual funds, options listed on stocks, and modifiers that convey information about the trading status of a company. For example, a fifth letter is added to stocks on the Nasdaq if they are delinquent in certain exchange requirements.
The meaning of the letters from A to Z are:
- A: Class A shares (e.g., BRK.A)
- B: Class B shares (e.g., BRK.B)
- C: Issuer Qualification Exception—the company does not meet all the exchange’s listing requirements but can remain listed on the exchange for a short time period.
- D: New issue of existing stock
- E: Delinquent or missed one or more SEC required filings (may also be denoted by .LF)
- F: Foreign issue
- G: First convertible bond
- H: Second convertible bond
- I: Third convertible bond
- J: Voting share
- K: Non-voting share
- L: Miscellaneous (e.g., foreign preferred, third-class of warrants, preferred when-issued, fifth class preferred shares, etc.)
- M: Fourth-class preferred shares
- N: Third-class preferred shares
- O: Second-class preferred shares
- P: First-class preferred shares
- Q: In bankruptcy proceedings
- R: Rights
- S: Shares of beneficial interest
- T: With warrants or with rights
- U: Units
- V: When-issued and when-distributed. These shares are about to go through a corporate action plan that has already been announced, such as a stock split.
- W: Warrants
- X: Mutual Funds
- Y: American Depositary Receipt (ADR)
- Z: Miscellaneous situations (same as the letter L)
- OB: Over-the-counter bulletin board
- PK: Pink sheets stock
- SC: Nasdaq Small-cap
- NM: Nasdaq National Market
History of Ticker Symbols
Edward Calahan, a telegraph operator working for the New York Stock Exchange, invented the ticker symbol in 1867. It was a way to transmit stock prices quickly and accurately over telegraph lines. The original ticker symbol consisted of two letters representing the company’s name, followed by a number representing the shares being traded. Today, ticker symbols are used by most major stock exchanges globally and play a crucial role in the financial industry. They have also become an important part of financial branding and marketing, with companies choosing symbols that are easy to remember or have a connection to their business.
How to Use a Ticker Symbol
Ticker symbols are used to identify specific publicly traded companies and the securities they issue. They are typically one to five letters long and are used on financial platforms, stock exchanges, and stock ticker boards. You can use a ticker symbol to track stock prices, place trades, or research a company. To use a ticker symbol, enter it into a financial platform’s search function or use it in a trading order. Ticker symbols are commonly displayed alongside a company’s name and stock price on financial news websites and other platforms.
Conclusion
Stock ticker symbols are unique codes that identify publicly traded companies and their securities. They are short and easy-to-remember abbreviations used to identify a specific stock or bond. Ticker symbols are typically displayed alongside a company’s name and stock price on financial platforms and are used in stock trading orders. They play a crucial role in the financial industry and have a rich history dating back to the 1800s.