Let’s talk stock symbols for a sec. On the NASDAQ, most stock symbols are four letters long. Microsoft is MSFT, Netflix is NFLX, and eBay is—and this’ll blow some minds—EBAY. But every once in a while, we’ll see a NASDAQ symbol with an extra letter attached to the end of it. We call that letter a fifth-letter identifier.
So what does it mean when our fave NASDAQ symbol suddenly shows up sporting a fifth-letter identifier? Well, it means there’s something going on with that company that might impact how its stock is performing. For example, if a company’s code has a Q at the end of it, the company is in bankruptcy. If it has a V after it, the stock is expected to split. Who knew one little letter could tell us so much?
There are currently 26 fifth-letter identifiers—one for every letter of the alphabet, get it?—and if we see a fifth-letter identifier tagging along with a stock we’re interested in, it’s definitely worth finding out what the code means and why it’s there.
Related or Semi-related Video
Finance: What are the NASDAQ and NYSE?74 Views
Finance a la Shmoop. What are the NASDAQ and the NYSE? Nasdaq, yeah it stands for
National Association of Securities Dealers Automated Quotation-systems. And [NASDAQ defined]
yeah, it feels like they got cheated out of an S in there somewhere, like NASDAQ'S.
That's what happens when life's on a budget. So NASDAQ is an electronic
version of the original wall, as in Street, Wall Street, yah that. Where
well-dressed folks would come with cash in hand scream out a stock and a price [stock market in 1900s]
and then trade shares. They would trade for whatever was trending at the time. Like
eyeball massagers, or wooden swimsuits, or motorised surfboards, all real things
by the way. NASDAQ is the much more modern version of its predecessor NYSE.
Is anything but nice when you lose money there. NYSE stands for New York
Stock Exchange and it too was an outgrowth of the well-dressed folks at
the wall. There are two key structural differences in the two trading systems,
the NYSE is an actual physical place, has a physical location, address, etc. and this [NYSE Building]
is what it looks like. NASDAQ is really a concept, a religion, a
network, it's not really a place. At least not a geographic place. The other big
difference is the manner in which shares are traded. The NYSE is an auction-based
system, one individual is a buyer of AMZN at $983.25, he screams electronically
that number and then buys from whoever is willing to sell at that price.
Individuals buy from individuals. That's an auction market. But NASDAQ is a
dealer market, that is somebody deals in the stock. They go out into the market[online stock market]
and buy say a million shares of whatever.com that was bought in the market
conveniently for exactly ten bucks even. That dealer now makes a market in that
stock, ie the dealer is kind of you know, their own individual market. And she
moves with the market to manage the spread in the trades. Like she might have
a narrow spread, where she's a buyer of the stock at $10.02 and a seller of the
stock at $10.07 a share. Or it's a really wild volatile stock, on a wild and [man and woman on rollercoaster]
volatile day, she might be a buyer only at $9.90 and a seller at $10.30, making 40
cents a share trade. Well you could do the fancy math that if she
keeps her inventory steady at a million shares and trades a million shares that
day. Well with that spread she makes 40 cents times a million or 400 grand for
the day's efforts. However after staring at a screen all day she's gonna have to
spend at least some of that money on eye care. [woman in office]
Thank goodness for those eyeball massagers.
Up Next
What is a CUSIP Number? All publicly tradable equities and fixed income securities in North America have 9 digit ID code numbers that are registere...
You've seen routing numbers on checks before, but what do they actually do? Hit play to find out.