OPINION: it’s certainly not irrational for Facebook to consider changing its name amid the negative publicity.
I know that’s difficult to believe. How can something as cosmetic as a new name fool anyone into thinking that a stock is a better value? Yet name changes apparently can have that effect, according to academic research into companies facing negative publicity that change their names.
Facebook FB, +2.10% is in just the opposite situation currently. Rather than wanting to take advantage of some new investment theme or fad, the company has an incentive to disassociate itself from the considerable negative publicity surrounding it. Cooper added that investors should not expect anything similar if Facebook does change its name. That’s because it is a huge and widely-followed company, in contrast to the much smaller companies that, in the wake of the internet bubble’s deflation, removed any reference to the internet or “dot com.”
If you had any doubt about investor gullibility, just think back to how traders reacted this past January when Tesla’s Elon Musk tweeted “Use Signal,” in an apparent reference to the encrypted messaging service that was developed by a non-profit organization and is not publicly traded. That didn’t stop traders from piling into an otherwise-obscure stock named Signal Advance SIGL, -1.08%, sending this once penny stock soaring by more than 12,000% over just two trading days.
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