Equity Research Tutorials
- Equity Research Fundamentals
- Equity Research
- Equity Research Skills
- Equity Research Report Writing
- Equity Research Course
- Equity Research Interview Questions
- Sell Side vs Buy Side
- Industry Analysis Guide
- Primary Market
- Secondary Market
- Stock Index
- Fundamental Analysis vs Technical Analysis
- Bull Market vs Bear Market
- Equity Research vs Sales & Trading
- Trading vs Investing
- Earnings Season
- Ticker Symbol
- Small-Cap Stocks
- Large-Cap Stock
- Blue Chip Stocks
- FAANG Stocks
- Sec Filings
- Insider Trading
- Capital Gains vs Dividends
- Loss Aversion Bias
- Investment vs Speculation
- Equity Research Books
- Equity Research Career
What is a Ticker Symbol?
Ticker Symbol Definition – A ticker symbol is a string of letters which is used for identification of a Bond, Stock, Mutual Fund, ETF or any other security traded on the stock exchange. It is also referred as a stock symbol.
When a company is issuing its securities to the public, an exchange is selected which will trade those securities and the ticker symbol shall identify those securities. Some of the examples are:
- NYSE (New York Stock Exchange) uses the ticker symbol with 3 letters or few – such as ‘NYT’ for the New York Times Co. or ‘T’ for AT&T.
- Symbols with 4 or more letters generally denote securities traded on the American stock exchange and NASDAQ.
- Those ending in ‘X’ indicate mutual funds.
- There are also certain symbols which denote specific status or type of security say, tickers ending in ‘Q’ indicate issuers which are under bankruptcy and letter ‘Y’ denotes security is an ADR.
Importance of Ticker
Some of the reasons indicating criticality of tickers are:
- It is the key to facilitating the huge volumes of trade occurring in the world. The targeted parties can be easily identified.
- The symbols with their additional-letter codes also communicate important information to the investors about the trading status of a security to the issuer.
- Their absence can cause confusion amongst the issuers, securities and securities from the same issuer.
A ‘tick’ is any change in the price irrespective of the direction. The stock ticker will automatically display the required tick with other essential information such as volume and other information needed by investors on the current market conditions.
A restricted number of stocks appear on stock ticker during any period of time primarily due to a large number of stocks getting the trade at a point of time. Mostly, stock ticker with greatest change in price in comparison to the prior day’s trading session or those with the highest volume appears on the stock ticker.
Ticker Symbol Example
The below snapshot is ticker symbol example of how a ticker looks like and the immediate indication it offers:
The position of the stock ticker keeps on scrolling on the ticker screen throughout the day and where does it stand at that point in time. As the stock market is very dynamic, the condition of the stock can keep on changing. It may be positive at one point in time and after an hour can fall into the red region. Additionally, if there is some news which has an impact on an entire sector or the overall stock market, one can witness all the impacted stocks in the same direction.
How to Find Ticker Symbol (Ticker Lookup)
You can visit the following links to find the Ticker Symbols (ticker lookup) of the respective exchanges.
Unique Aspects of Ticker Symbol
In the US, stock ticker symbol are aimed at being as descriptive as possible despite being short. The single-letter ticker symbol is the most prized one. Let us understand some of them:
- First Letter: It is the most common ticker symbol matching the initial letter of a company’s name. For e.g. ‘F’ as the stock ticker symbol of Ford Motor and letter ‘C’ used by Citigroup.
- Company Name: This is also a relatively common symbol for identification especially the established ones. E.g. AAPL is the ticker symbol for Apple and MSFT for Microsoft.
- Product Name: Some firms also reference the products which they sell in their ticker symbol making them easier to recollect. For e.g. The Cheesecake Factory uses CAKE. On similar lines, Harley-Davidson makes use of the ticker symbol of HOG (common but informal term for their motorcycles) for easier identification in the market.
- Customer Experiences: Such symbols are mostly used in the service industry since this is what they sell to the consumers. Say, Yum! Brands, the parent company of KFC, Pizza Hut and Taco Bell uses the symbol of YUM in the form of “Yum! That food was delicious”
- Sounds: This is a creative way for distinguishing existence of the product in the market such as National Beverage Corporation (maker of carbonated drinks) uses FIZZ to create the essence of the product.
- Numbers: This requires immaculate precision and may not be easily understood by those viewing them not familiar. It is largely used in Japan. For instance, the ticker symbol for Sony Corporate is 6758 and Toyota Motor Corporation is 7203 on the Tokyo Stock Exchange. There is a specific method whereby in Japan, the numbers from 6000 are used for machinery and electronic companies. Subsequently, numbers from 7000 are used for transportation and car companies.
The first digit indicates the general industry and the random numbers in Japanese ticker numbers do not have specific descriptions making them harder to memorise.
- One should also keep in mind the spelling of the tickers as there can be a thin line of demarcation between 2 stocks having close to identical tickers. For e.g. in 2013, due to all the hype around the IPO of Twitter, a large number of investors mistakenly invested in Tweeter Home Entertainment which turned out to be a bankrupt electronics firm. The ticker of Twitter was TWTR whereas that of the latter was TWTRQ causing the confusion. As mentioned in the initial part of the article, tickers ending with ‘Q’ indicate bankruptcy.
- If a ticker symbol is marked with letters E on NASDAQ or an LF on the NYSE, it is an indication the associated company has fallen behind on its reporting obligation to the SEC (Securities Exchange Commission). These letters are added at the end of the normal ticker symbol. The impacted companies are also set a grace period within which the reporting requirements should be satisfied. Once the requirement is met, these letters are subsequently removed. If the grace period has passed away and the requirements are not met, the security is under threat of getting removed from trading.
This has been a guide to what is Ticker Symbol? Here we discuss its importance, examples, how to find ticker symbol of NYSE and NASDAQ and their unique aspects. You may also learn more about corporate finance from the following recommended articles –