Would a different ticker help Facebook?

Studies show that a clever, pronounceable ticker can lure investors. Maybe FB should have been 'LIKE' instead.

By Benzinga Sep 7, 2012 3:05PM
By Gordon Wilcox 

One of this year's biggest Wall Street stories has been the breathtaking decline of Facebook (FB) following its May initial public offering. The social media darling went public at $38 and is now trading around $18.97 -- a 50% plunge.


There is no denying that investors have myriad concerns about Facebook. Chief among those concerns is how the company is going to increase revenue and become a major player in mobile applications. Said differently, chances are sellers would have gotten around to beating up the stock at some point.


Maybe Facebook could have gotten off to a better start by doing something simple, such as picking a different ticker other than "FB." It might sound wacky, but there is evidence to support the notion that stocks with pronounceable tickers do perform well.


According to the Wall Street Journal, Princeton's Adam Alter and Daniel Oppenheimer looked at nearly 800 symbols that debuted on the New York Stock Exchange and the American Stock Exchange between 1990 and 2004 and divided them according to whether their symbol was pronounceable. They found investing $1,000 in the pronounceable stocks at the start of their first day of trading would have made you $85.35 more in that day than investing in unpronounceable ones.


Another study by Pomona College finance professor Gary Smith was cited in the Journal article. Smith's study focused on the longer-term performances of stocks with clever tickers. The result: From 1984 to 2004, a portfolio of stocks people considered the cleverest returned 23.6% compounded annually, compared with 12.3% for a hypothetical index of all NYSE and Nasdaq stocks, the Journal reported.


Clearly, investing solely on the basis of ticker alone is a lot like going to the track and betting on a horse based on the color of its silks. Said differently, no one in his or her right mind should be buying a stock based on ticker alone.


That said, there are some stocks with clever tickers that have performed well over time. Since its spin-off from PepsiCo (PEP) in 1997, Yum Brands (YUM) has surged 762%. Anheuser-Busch InBev (BUD) has jumped 76.5% in the past five years. Southwest Airlines (LUV) is up 9% in the past year. When rival American traded on the NYSE, it was under the ticker "AMR." Not catchy at tall. Today, American is under bankruptcy protection.


Again, no one should be buying a stock based on ticker alone, but the evidence suggests that Facebook should have considered a ticker such as "FACE" or "LIKE" to have boosted the chances of the IPO getting off to a better start.


More from Benzinga
17Comments
Sep 7, 2012 3:40PM
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This article is a waste of time.

And some knucklehead got paid for this crap.

Sep 7, 2012 5:53PM
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yeah. and IBM's stock would surely plummet to the center of the Earth if its stock ticker was MBI. puhllllllllllllllllleeeeeeeeeeeeze. this level of analysis is banal inanity at the very least
Sep 7, 2012 6:58PM
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Don't think the ticker mounts to a hill of beans...lol

I never joined FB, saw how much time others wasted on it..

Now seeing how much money others wasted on it...

I have no trust in Facebook...?

Sep 7, 2012 7:40PM
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They should change the symbol to DM - for Data Mining
Sep 8, 2012 11:32PM
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How about "POOR"?  Cause that's what you'll be if you buy this dog.
Sep 8, 2012 10:39PM
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its symbol could have been ****. Thats about what the investors who bought it thought.
Sep 8, 2012 8:55AM
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With all due respect, are you SERIOUS?  What could be more simple a ticker than FB? Making the ticker FACE or LIKE wouldn't have made a DAMN bit of difference in the performance of Facebook from day one.  Facebook shouldn't have went public in the first place.  At least, not yet and not at its initial price offering.  Facebook bombed because people f'd up. Period.
Sep 9, 2012 11:13AM
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Really? The stock would have done better if they just had a catchier name on the ticker!? WTF! I guess that is what constitutes a stock or IPO these days! How about FLUFF! OR FUBAR?!
Sep 9, 2012 7:43PM
Sep 9, 2012 1:13PM
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I wonder if these are the same people who invested in MySpace?
Sep 9, 2012 3:55AM
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 FACE is already taken on the Nasdaq.  It's Physicians Formula Holdings, Inc.
Sep 9, 2012 8:36AM
Sep 9, 2012 7:15PM
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Are you seriously suggesting that a pronouncable name could be of a huge benefit to Facebook or any other equity?  If so it explain why the market is erratic without any logic behind the price fluctuation.  God help us if people like you become serious analysts
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