In the late 1990s and early 2000s, many listed companies changed their names to add “.com”. This usually meant a solid bump in the share price; the market was overexcited about the internet at the time.
A 2002 study, headlined A Rose.com by Any Other Name, in the Journal of Finance, examined every publicly traded company in the US that changed its name between June 1998 and July 1999. The study found that companies that added a dotcom or other internet-related terms to their names generated an extra return of about 74% in the 10 days surrounding the announcement. Importantly, they held onto the gains until the collapse of tech stocks in the dotcom crash.
A few years ago, a similar phenomenon appeared around crypto and blockchain, as the bitcoin price was creating all sorts of hype.
So, for instance, the Long Island Iced Tea Corp. renamed itself to Long Blockchain Corp. It said it was “in the preliminary stages of evaluating potential business opportunities in blockchain technology”. It would, however, still make iced tea.
The stock soared almost 400% on the day of the announcement.
The study found that companies that added a dotcom … generated an extra return of about 74% in the 10 days surrounding the announcement
And then things turned ugly as the Nasdaq, the US Securities & Exchange Commission and the FBI all launched investigations into the company and its directors. Its shares were delisted in 2021.
In September 2024 The Singing Machine Company, the US’s largest distributor of consumer karaoke products, rebranded as Algorhythm Holdings, with the new ticker RIME. Last year it exited karaoke and acquired SemiCab, a cloud-based AI freight optimisation platform that predicts and optimises truck loads at scale. The idea was to reduce empty truck miles by 70%.
The stock tripled on the news while logistics stocks got hammered. CH Robinson Worldwide, Landstar System and RXO all dropped 15%-25% on the news.
Yet the hype was just that — hype. No product has shipped and Algorhythm’s share price has collapsed back to what it was when the company just sold karaoke products.
This month Allbirds, the sneaker brand that went public in 2021 at $15 a share, announced it was selling its entire shoe business to American Exchange Group for $39m. It said it plans to raise $50m in convertible financing and pivot to an AI compute infrastructure company under the new name NewBird AI.
The stock went crazy. From just over $2 (well below the IPO price), it rallied to over $24. But it’s already collapsing and is back below $10.
There are two lessons here.
First, a name change can dupe enough of the investing public to result in a wild jump in a stock price. The good news? If we’re quick enough, we can profit from that spike.
The second and more important lesson is that changing a name means nothing. There needs to be real and meaningful change in strategy too — and that takes time, effort and skills. It’s probably best to watch from the sidelines.
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