Confusion over stock names of Zoom, NIO, and SIGL show how Wall Street’s lax naming rules breed doppelganger stocks

While Zoom Video Communications’ popularity boosted its share price fourfold last year, it inadvertently lifted another Chinese company, Zoom Technologies

Zoom Technologies, a maker of mobile phone components, was asked by US regulators to change its ticker sign from ZOOM to ZTNO to avoid confusion among investors

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The popularity of Zoom’s video conferencing services boosted the company’s share price by 400 per cent last year. Photo: AP Photo

Published: 8:00pm, 12 Mar 2021Updated: 8:00pm, 12 Mar 2021

Of the many bizarre happenings in stock trading, one that stands out is the classic tale of mistaken identity on Wall Street. Similar ticker symbols have occasionally sent the wrong stock flying, but last year’s rip-roaring market increased the frequency and Nasdaq is keen for investors to not mess up.

Zoom Video Communications has been one of the biggest beneficiaries of the pandemic for its videoconferencing services. Its explosive popularity not only fuelled a fourfold surge in its share price last year, but at times it also bolstered the shares of an unrelated Chinese company, Zoom Technologies, a maker of mobile phone components.

The Silicon Valley start-up trades under the ticker symbol ZM, while the latter previously went by ZOOM, causing confusion among some investors.

Between two companies with similar names or tickers, trades made by mistake could account for 5 per cent of trading turnover for the smaller firm, according to a study by New Jersey-based Rutgers University in 2019. Such investor confusion could cost an average of US$1.1 million a year in transaction costs.

A Nasdaq spokesperson said that it is up to the investors to make sure they are looking at the correct ticker when investing in a company. Photo: Reuters

And despite the confusion on doppelganger stock mix-ups, bourse operators maintain a more hands-off approach with ticker confusion.