Why the Pandora Ticker Is Coveted
Online-radio service Pandora Media and Internet real-estate tracking website Zillow are about to join a rare group of publicly traded companies with single-letter ticker symbols.
Pandora began trading Wednesday the New York Stock Exchange under the ticker "P," and if the Nasdaq Stock Market approves Zillow’s request for the ticker "Z" it will be the first time a single-letter stock trades on the Nasdaq exchange.
Why are alphabet tickers so coveted? One-letter tickers were once considered a valuable commodity because they sped the execution of trades, but an easy-to-remember ticker also helps with corporate communications and marketing. (There’s a reason drivers are willing to pay a premium for vanity license plates.) Newly public companies are also eager to join the elite crowd of one-lettered household names: Citigroup, Ford Motor, Macy’s and Lowe’s .
Despite their prestige, single-letter symbols don’t always translate into corporate success. The once venerable discount retail chain F.W. Woolworth’s went out of business soon after the company changed its name to Venator Group in 1999 under the ticker "V." (Visa later acquired the symbol after Venator changed its name to Foot Locker and switched to the ticker "FL." ) And US Airways, which once traded under the symbol "U," filed for bankruptcy protection—twice—before being acquired by United Airlines parent UAL Corp. in 2000.
Studies have also shown that tickers that closely relate to their companies’ brand outperform single or random ticker symbols—at least for a little while.
A 2006 study of IPOs by the Proceedings of the National Academy of Sciences found that company symbols you can pronounce—think BUD, HOG, GOOG —performed better immediately following their IPOs than tickers that were unpronounceable. Researchers said the boost pronounceable stock symbols received soon after their debut wore off over the longer-term, however.
Still, the alphabet ticker mojo seems to be working for Pandora—its shares soared more than 50 percent in its market debut from its offering price of $16, valuing the company at more than $4 billion. Pandora and Zillow taking “P” and “Z” off the list leave just five unassigned one-letter tickers: I, J, Q, U and W.