What is a Stock Ticker Symbol? - Investing for Beginners

Posted by CapWay in InvestingMay 14, 2021(Last Updated November 24, 2022)4 min read
Key Takeaways
  • A stock ticker symbol is a combination of unique letters, numbers, or both that helps identify a publicly-traded company.
  • Stock tickers allow current and potential investors to identify publicly-traded companies on stock exchanges.
  • The color of the stock’s ticker can represent how well or poorly a publicly-traded company is performing in real time.
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What is a Stock Ticker?

 

Publicly- traded companies on the stock market are identified by their stock ticker symbol, which is a unique set of letters, numbers, or both. You can read stock companies and stock prices by identifying their symbols. Some examples are Netflix, which trades on the NASDAQ as NFLX. Another example is Best Buy, which trades on the New York Stock Exchange (NYSE) as BBY.

 

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Image credit: NFLX Stock Ticker on Yahoo Finance

 

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Image credit: Best Buy Stock Ticker on Yahoo Finance

 

The History of Stock Ticker Symbols

 

In 1867, Edward A. Calahan invented the first ticker tape machine. The machine was eventually upgraded by Thomas Edison.

 

In the 19th century, ticker tape machines were used to print stock symbols and stock information on a ticker tape. The information on this tape included trades and prices, which were transmitted over a telegraph wire. 

 

These machines would make ticking sounds when printing long, narrow pieces of paper with stock quotes. Eventually, stock symbols and information became available digitally without ticking sounds. However, the stock ticker kept its original name due to the original ticking sounds. 

 

Identifying Stock Tickers

 

Stock tickers are an identifier of the stock name itself. They also make it easy to identify where a stock trades by the number of letters in the stock symbol. For example, a three-letter stock symbol usually trades on the New York Stock Exchange (NYSE). Therefore, if you know that Best Buy's symbol is BBY, you can likely identify which exchange it is traded on.

Image credit: dennizn / Shutterstock.com

 

A stock symbol with four to five letters trades on the National Association of Securities Dealers Automated Quotations (NASDAQ). A ticker with five letters typically means that it's a foreign stock. 

 

Examples of stock ticker symbols on different stock exchanges are Apple and Chipotle. Apple trades on the NASDAQ as AAPL, while Chipotle trades on the NYSE as CMG. One example of a foreign stock is LVMH Moët Hennessy Louis Vuitton, which has a ticker of LVMUY.

 

Additional Stock Information

 

Publicly traded companies are allowed to trade on several different stock exchanges. However,  no two companies will share the same stock symbol on one stock exchange. So, for example, you wouldn't see Tesla's stock ticker, TSLA, listed twice on NASDAQ's stock exchange. However, you may see TSLA on both the NASDAQ exchange and the Cboe EDGX exchange.

 

If you look up a company using its ticker symbol, it will include a market summary of the stock's current price and the percentage of the stock’s daily price increase or decrease. The summary, as shown below, will also include the highest and lowest amount the stock has traded for in a recent 52-week period and any additional information about a stock's performance.

 

Below is Tesla's (TSLA) Stock Information on Yahoo Finance (2021).

 

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Image credit: Tesla, Inc. on Yahoo Finance

 

The color of a stock ticker is a key indicator of a stock's performance. The color green indicates that the stock is trading higher (increasing in price) than the previous day's closing price. Conversely, the color red indicates that the stock is trading lower (decreasing in price) than the previous day's closing price. The colors blue and white mean that a stock's performance is unchanged from the previous day's closing price.

 

In the image displayed above, TSLA was trading 3.50% (or $25.13) higher than its previous day's closing price. Therefore, the colors representing the change are colored in green.

 

Research Your Investments

 

Before investing in stocks, it is essential to understand the information that is readily available and presented to you as a potential investor. Looking up a stock by its stock symbol will allow you to access all the information you need to make an informed decision and succeed as a future investor. 

 

Recommended Read: Market Capitalization | Money Meanings

 

Some key information displayed when looking up a stock symbol is the number of shares traded, the price it is trading in, and the change in direction and amount in USD. As shown above, these key metrics can help investors understand how well each stock is performing at any given time.

 

Understanding why prices fluctuate is also important. As an investor, knowing how to identify stocks by their stock symbol will help you understand the information presented to you about the company. In addition, understanding information such as market cap, EPS, and recent stock splits may also help you make intelligent decisions as an investor.

 

The Money Wrap-Up

 

Although risky and never a guaranteed win, investing your money has been proven to be an essential part of building wealth. It is key to understand where and how you invest your money in order to diversify your investments and lower your portfolio risk. That includes learning to read financial information, including stock ticker symbols and summaries, which will help you build a strong investment portfolio and wealth long-term.

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