Companies choose their identities for many reasons. But are there patterns in the naming of corporations that could shed light on other financial market trends?
A corporate name change can occur for a variety of reasons, from companies’ desire to distance themselves from scandal or modernise their brands, to the reflection of a merger or acquisition or changing lines of business.
Some of the biggest US-listed corporations have simplified their names in recent years, in part at least to signal new ambitions. Apple dropped the “Computer” from its name when it announced the iPhone in 2007. More recently, Tesla Motors became Tesla. Similarly, Wal-Mart Stores switched to Walmart at the start of this year to reflect its commitment to online retail, and Weight Watchers announced in September that it would call itself WW to reflect its desire to be known as a diversified wellness business.
Some changes veer towards absurdity – or worse. Mondelez International, formerly Kraft Foods, unwittingly echoed vulgar Russian slang. The Tribune Publishing Company’s short-lived rebrand as tronc – short for Tribune Online Content – was mocked as “the sound of a millennial falling down the stairs”.
Names are one of many attributes of firms that can be quantified and analysed. Their associations - whether with corporate ambition or embarrassing misadventure - suggest that they could hold important information.
The Name Game
Because they are used to signal to investors, corporate names can be linked to financial market trends. This becomes most obvious during waves of technological optimism.
Blockchain is among the latest in a long line of hyped new technologies, and disparate firms have included it in their names in an attempt to cash in on the euphoria. Bioptix, a laboratory machine manufacturer, renamed itself Riot Blockchain as the Bitcoin price approached $6,000. The market cap of the company soared from $20m before the change to nearly $400m when the price of Bitcoin hit a peak in December 2017.
Around the same time, a drinks producer based in Hicksville, New York named Long Island Iced Tea rebranded as Long Blockchain. A stretch perhaps, but this switch also prompted a share price surge, with the company’s market cap trebling to almost $70m overnight.
The Soaring Valuation of Blockchain-Named Firms in Late 2017