What Is a Stock Symbol?
A stock symbol is a unique series of letters assigned to a security that trades on a stock exchange. Stock symbols are essentially a shorthand way of describing a company’s stock. Stocks listed on the New York Stock Exchange can be up to five characters, while on the Nasdaq, stocks can have up to four characters.
When modern stock exchanges came to be in the 1800s, traders on the floor of these exchanges would write and shout out the names of companies in full. As the number of publicly traded companies increased, they soon realized that writing or shouting a company’s full name was not optimal. For better efficiency, stock symbols came to life.
Examples of stock symbols you are likely familiar with are AAPL (Apple), MSFT (Microsoft), and AMZN (Amazon). If a company has more than one share class that is publicly traded, the class will usually have an added suffix. For example, the two classes of Alphabet’s stock are GOOG and GOOGL. GOOG are Class C shares and do not offer voting rights. GOOGL are Class A shares that offer one vote per share. Alphabet has Class B shares, but they are only for the founders and insiders, have ten votes per share, and cannot be publicly traded.
Stock symbols have helped to simplify the stock exchange system, where all securities have their own unique series of letters. Not that it truly matters when it comes to investing, but what is your favorite stock symbol you have come across? Let me know in the comments.