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Meta Platforms follows various high-profile corporations that modified their ticker symbols.
Fabrice Coffrini/AFP through Getty Images
Meta Platforms
,
previously generally known as
Facebook
,
is taking the ultimate step to decisively shed its earlier id on Thursday.
The firm will start buying and selling underneath ticker image “META,” abandoning its present buying and selling image of “FB,” which has been in use because the firm’s preliminary public providing in 2012.
There’s just a few causes corporations change their ticker symbols, together with merger and acquisition exercise, delistings, and identify adjustments. Meta, as an illustration, mentioned the brand new ticker aligned with the corporate’s rebranding from Facebook to Meta, introduced final October.
For many executives, a ticker and identify change generally is a method to improve the attraction of a inventory. Indeed, research have discovered that individuals are extra more likely to buy shares with simply pronounced and memorable ticker symbols.
While the ticker change gained’t imply a lot for individuals at the moment holding the inventory—who will robotically see the replace on their buying and selling platforms—historical past means that altering a ticker may create confusion within the rapid aftermath.
In a 2006 research of 171 ticker adjustments, researchers discovered that there was a “significant reduction in trading volume” and a decline in inventory costs on the day a pure ticker change went into impact, in addition to on the next day. The drops weren’t reversed within the subsequent 5 days, with some persisting over a decade, the University of Texas at San Antonio researchers discovered. They attributed the decline to buyers being ill-informed concerning the change.
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Although info is extra available to buyers now, a ticker change can nonetheless alter buying and selling volumes. For instance, amongst seven corporations that modified their tickers in 2022, 5 noticed buying and selling volumes had been under their 30-day common on the day of the change, based on Dow Jones Market Data. This consists of well-known names reminiscent of
Paramount Global
(
PARAA
) and
Shell PLC
(SHEL).
When it involves inventory costs in the long term, nonetheless, the connection is far much less clear. Even with a ticker change, inventory costs are nonetheless largely decided by a number of exterior causes, from an organization’s efficiency to the macroeconomic setting. Take Shell. The inventory gained 0.6% within the month after altering its ticker on Jan. 31, outperforming the
S&P 500
,
which misplaced 1.5% throughout that very same interval. Oil shares began to tick up in February as tensions brewed between Russia and Ukraine.
Warner Bros. Discovery, nonetheless, was down 32% a month after altering its ticker on April 11, whereas the S&P 500 was down 12.3%. Within that month, investor fears on the way forward for streaming companies heightened following
Netflix
’s
(NFLX) subscriber stumble.
In brief, Meta’s ticker change won’t be the defining issue influencing the inventory value. But it might serve buyers nicely to recollect to commerce underneath the fitting ticker come June 9.
Write to Sabrina Escobar at sabrina.escobar@barrons.com
