One of this year's biggest Wall Street stories has been the
breathtaking decline of Facebook (NASDAQ:
) following its May initial public offering. Simply put, the social
media darling went public at $38 and is now trading around $19.25
-- a 49.3 percent plunge.
There is no denying that investors have a myriad of 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 and kept
the sellers at bay for a little while by doing something simple,
such as picking a different ticker other than "FB." It might sound
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
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 percent compounded annually, compared with 12.3
percent for a hypothetical index of all NYSE and Nasdaq stocks, the
Clearly, investing solely on the basis of ticker alone is a lot
like going to the track and betting on a horse just because one
likes the colors of the horse's silks. Said differently, no one in
his or her right mind should be buying a stock based on ticker
That said, there are some stocks with clever tickers that have
performed well over time. Since its spin-off from PepsiCo (NYSE:
) in 1997, Yum Brands (NYSE:
) has surged 762 percent. Anheuser-Busch InBev (NYSE:
) has jumped 76.5 percent in the past five years. Southwest
) is up nine percent 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.
(c) 2012 Benzinga.com. Benzinga does not provide investment advice.
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