A stock symbol, or ticker, is a unique series of letters assigned to a security for trading purposes. Stocks listed on the New York Stock Exchange (NYSE) usually have four or fewer letters, whereas Nasdaq-listed securities can have up to five characters. Stock symbols, also known as ticker symbols, serve as shorthand for the company’s stock and facilitate easier trading and identification.
Key Takeaways
- A stock symbol is an arrangement of characters—usually letters—representing publicly-traded securities on an exchange.
- When a company issues securities to the public marketplace, it selects an available symbol for its shares, often related to the company name.
- Investors and traders use the symbol to place trade orders.
- Additional letters added to stock symbols denote specific characteristics such as share class or trading restrictions.
Understanding Ticker Symbols: A Historical and Functional Overview
In the 1800s, as modern stock exchanges emerged, floor traders communicated stock prices of traded companies by writing or shouting out company names. With the increase in the number of publicly traded companies from dozens to hundreds, this method became inefficient, especially after the invention of the stock-quoting ticker tape machine in 1867.
To streamline this process, company names were shortened into one to five alpha symbols. Today, while paper ticker tape is a relic of the past, stock tickers still exist as digital displays, efficiently relaying price changes and distinguishing companies with similar names, such as Citigroup’s ticker C and Citizens Financial Group’s ticker CFG.
Moreover, spin-offs like Hewlett Packard Enterprise (HPE) and HP Inc. (HPQ) highlight how ticker symbols can signify different entities originating from the same corporation.
Types and Categories of Ticker Symbols
Preferred Shares
If a company has multiple classes of shares, a suffix is added to denote the specific class. Preferred stocks usually have the letters “PR” followed by the class designator, such as CTC.PR.A for Cory’s Tequila Corporate Preferred A-shares.
Share Voting Class
Stock symbols can also indicate voting rights. For example, Alphabet Inc. (formerly Google) has Class C shares (symbol GOOG) with no voting rights and Class A shares (symbol GOOGL) with one vote per share. Berkshire Hathaway’s Class A shares trade under BRK.A and Class B shares under BRK.B.
Stock Ticker Modifiers
Symbols can include additional letters to convey specific information about the stock’s status, such as:
- Q: In bankruptcy proceedings
- Y: American Depositary Receipt (ADR)
- E: Delinquent or missed SEC filings
NASDAQ uses a fifth letter to provide extra information. For instance, ACERW indicates Acer Therapeutics Inc. (ACER) with warrants attached.
Evolution and Impact of Ticker Symbols
The ticker symbol was invented by Edward Calahan, a NYSE telegraph operator, in 1867 to transmit stock prices accurately via telegraph. The first ticker symbol identified Union Pacific Railroad Company (UP) stock. Ticker symbols have since evolved to include up to five letters and serve as a significant part of financial branding. Selected symbols often relate to the company’s name or operations, fostering recognition and marketing.
Practical Uses of Ticker Symbols
Ticker symbols are vital for:
- Identifying a specific security: Symbols pinpoint a stock or bond, like “AAPL” for Apple Inc. or “SPX” for the S&P 500 index.
- Tracking stock prices: Real-time tracking on financial platforms relies on ticker symbols.
- Placing trades: Trader orders use symbols to specify securities for transactions.
- Researching companies: Symbols allow for quick access to a company’s financial details.
How to Find a Company’s Stock Ticker Symbol
You can locate a company’s ticker symbol by online financial databases, company websites, stock exchange sites, or through financial advisors. If a symbol isn’t easily found, the company might not be publicly traded in major U.S. markets.
Why Is It Called a Ticker Symbol?
The term “ticker” comes from machines that printed stock prices on ticker tape, reminiscent of the modern stock price updates via telegraph.
Popular Stock Tickers
Examples include:
- Apple Inc. (AAPL)
- Alphabet Inc. (GOOGL)
- Microsoft Corporation (MSFT)
- Amazon.com, Inc. (AMZN)
- Meta (formerly Facebook) Inc. (META)
- Tesla Motors (TSLA)
- The Goldman Sachs Group, Inc. (GS)
- The Dow Jones Industrial Average (DJIA)
- The S&P 500 Index (SPX)
- The NASDAQ Composite Index (COMP)
Conclusion
Stock ticker symbols are unique, alphabetic codes vital for identifying and trading publicly-traded securities. These symbols streamline financial communication, enhance market efficiency, and are critical pieces of modern financial infrastructure. Examples like AAPL for Apple Inc. and SPX for the S&P 500 underscore the essential role ticker symbols play in daily trading and finance.
Related Terms: NYSE, Nasdaq, securities, preferred shares, class voting rights, mutual funds, options.
References
- HP. “HP Board of Directors Approves Separation”.
- New York Stock Exchange. “Appendix A: National Market System Plan for the Selection and Reservation of Securities Symbols”, Page 8.
- History Channel. “First stock ticker debuts”.
