A rebrand can reinstate a brand’s individuality, with an aim to set them apart from their competitors. Often a rebrand will transform the look and feel of the company, to keep up with the times and reflect modern society.
A rebrand can have a positive effect on the company’s marketing, changing the customer’s perception of the product or service and therefore, their sales.
Since the growth and success of a company are intrinsically linked to their stock’s performance, in this article we will take a look at the rebrand of one of the biggest tech companies, and how this affected the company’s stock.
How can company rebrands affect their stock?
The stock market is highly volatile and can be influenced by a variety of external factors. Because of this, an internal change within the company, whether that’s an alteration to the managerial team or a large company rebrand, can have an effect upon the value of their stock.
Company rebrands tend to be extremely expensive, and since consumers tend to enjoy the familiarity of their favourite brands, they can evoke mixed reactions from the public.
In 2018, Dr. Yanhui Zhao, the University of Nebraska’s assistant professor of marketing, launched a study to evaluate whether rebranding is worthwhile. This study looked at the rebrands of 215 companies over a 20-year period, from 1996-2015.
From the data acquired, he found that companies experienced an average increase in stock value of 2.46%, equating to an average market value gain of $31 million. This shows that shareholders value company rebrands, and on a whole, they can have a positive impact upon a stock.
As a stock trader, this is worthwhile to know, since you may be prompted to invest in a particular stock following a rebrand, as it could present you with ample opportunities to profit. For example, you can use the Plus500 stock trading platform to speculate on the value of some of the world’s largest companies, and invest using contracts for difference (CFDs) which enable you to open a position in these stocks without owning the underlying asset itself.
Facebook (FB) — Meta (MVRS)
With a further understanding of the impact of a rebrand on stock prices, let us explore the example of tech giant, Facebook.
Facebook is the world’s largest social media company, the seventh largest company in the world, and has an active user count of 2.8 billion people.
On 28th October 2021, the parent company of Facebook rebranded and became Meta. This was represented externally, by both the name change and change in logo to an infinity sign, resembling the letter M.
The company owns multiple social media platforms, including Instagram, Messenger and WhatsApp — all of which now fall under the Meta brand. From 1st December 2021, the official corporate name became Meta Platforms, and the stock began trading under the symbol MVRS. The name and logo are now used in all of the company’s apps, including their virtual reality brand Oculus.
The rebrand was announced by the company’s co-founder and CEO Mark Zuckerberg at the most recent Facebook Connect event, which usually takes place annually. Zuckerberg explained that the change was inspired by the fact that the company has moved further into the metaverse — a virtual reality that can be accessed online, and enables people to interact socially.
Initial reaction to the news saw Facebook (now Meta) shares rise 2% higher on October 29th to $324 each. Since then, experts predict the company will continue to grow in 2022, as Meta stock rose by 13% over the previous 12 months.