One of the things many new beginner investors may be wondering about is what stock ticker symbols mean and how a company gets a certain stock ticker. You may already be familiar with the stock symbols you already own, however there are thousands available on the stock market.
Why is it important to understand stock ticker symbols?
While it’s not absolutely crucial as an investor to know what stock ticker symbols mean, it can be very helpful for you when researching all the various stocks and companies available to invest in. For example, certain letters after a stock symbol can mean different things, especially in the case of 5 letter stock symbols.
Why We Use Stock Ticker Symbols
There are a few reasons we use stock ticker symbols today. For starters, it is much easier to remember a couple of letters than a big complex name for a company, especially for companies which are in industries you may not be familiar with.
Some companies are able to choose their stock ticker symbol based on the letters of their company brand name. For example, Facebook, which is commonly abbreviated as “FB” is able to further strengthen their brand recognition through using FB as their stock ticker symbol.
The main reason we use them however is thanks largely in part to Thomas Edison, who invented a system for investors to stay updated on the latest stock price movement across the country: the stock ticker tape machine. This led to the need for companies to use shorthand symbol letters that could easily be recognized by investors.
Common Characteristics of Stock Symbols
Typically after a company choooses to go public as an IPO (which stands for initial public offering), they then choose a 3 or 4 letter symbol. While there are some companies which have 1 or 2 letter symbols, this is not very common and are limited only to very large and well established companies typically. Most of the one and two letter symbols are companies earning billions of dollars in revenue annually and are well recognized brand names.
The letters chosen for the stock symbol are typically related somewhat to the name of the company. For example, AAPL stands for Apple and YUM is the name for the company YUM! YUM owns Pizza Hut, Taco Bell, and Kentucky Fried Chicken.
The Different Classes of Stocks
Sometimes companies will have multiple stocks in different classes, and so the letters in a stock symbol ticker can distinguish the different class of a stock. The class of a stock sometimes can influence the weight of voting rights shareholders posess. For example, Class A stock holders may have voting rights, whereas Class B stock holders have no rights at all. Typically when this happens, the letter “A” or the letter “B” will be attached or added to the end of the stock symbol for the company.
Stock Ticker Symbol Letter List
There are also a number of other letters which can be added to the end of a company’s name which can mean a number of things. This is why there are some 5 letter stock symbols on the market today.
Here is a breakdown of what all of these letters mean:
A: Class A as noted above
B: Class B as noted above
C: Exempt from NASDAQ listing requirements for a restricted time period
D: New issue of an existing stock
E: Delinquent in required filings with the SEC
G: This stands for First Convertible Bond
H: This letter means Second Convertible Bond, held by the same company
I: A Third Convertible Bond, held again by the same company
J: This means Voting
K: This means Non-voting
L: This letter is reserved for various situations such as foreign preferred stocks, preferred stocks when-issued, a second class of units, a third class of warrants, or a sixth class of preferred stock
M: Fourth preferred, same company
N: Third preferred, same company
O: Second preferred, same company
P: First preferred
Q: In bankruptcy proceedings
S: Beneficial interest
T: With warrants or with rights
V: When-issued and when-distributed
X: Mutual Fund
Y: ADR ( this stands for American Depositary Receipts)
Z: This also stands for a number of various situations – can be anything from a second class of warrants, a fifth class of preferred stock, a foreign preferred stock when-issued, or any unit, receipt, or certificate which represents a limited business interest.
As you can see, knowing some of these letters are very important, especially if you notice stocks ending with the letter E or Q as this could mean a company is experiencing problems with management or financials.
We hope that this overview of understanding what stock ticker symbol letters means helpful and useful. If you’d like to take a look at some various stock ticker symbols to see what is all available, be sure to check out our stock message boards as well, where you can search by symbol as well as see real time data and join the latest discussion on stock tickers you are watching!