After you have passed your initial stages of investing and know how to invest in stocks and match stocks with your goals you may opt to do some stock picking. Cherry picking is not for everyone, and before you engage in that you must understand that investing in a stock means investing in a company as a whole.
One question I am constantly asked is whether companies rebranding themselves, redefining their business strategies, or going through a comprehensive reorganization are a good target to invest into. My answer, as always, would be that it’s case specific.
One company may rebrand itself because its reputation was atrocious so far – in that case, it really depends what are the next planned steps, but it is generally speaking not an amazing invest target. Another company may go into a reorganization process because they are simply not turning as much money as they did in the past, and want to cut back on expenses. Again, not the best company to invest into (but of course it all depends on the price vs value).
On the other hand, some really good companies came out of the need to reinvent, reach for new territories and even change their business model. For example Netflix that started off as a streaming service which turned into a content producer, and Stella Artois has shifted from an elite, exclusive and expensive beer into an accessible brand sold in every supermarket.
And then you have early stage companies, which would very naturally shift between names and business models just because when you start a new company you never really know which direction it’s gonna go in. In fact, I would be more hesitant about investing into companies that have never, even in early stages, shifted between business models, changed names, or rebranded completely. Even companies like Instagram (old name Burbn) or LG (old name Lucky and Goldstar) did that.
And then you have rebranding which is essentially just a change of a businesses’ name, which is again, a very progressive and welcomed approach today. Most businesses aren’t about showing centuries of operations (unless in a sensitive area like banking), it’s about appealing to the customer. Hence, Weight Watchers changed name to WW and Dunkin’ Doughnuts changed its name to Dunkin’, or Lending Express rebranding to Become.
The bottom line I’ve been trying to suggest using a variety of examples is that sometimes, perhaps often, a rebranding is needed. The world is changing and smart companies should change alongside it, and adjust their business to their audience and outsmart their competition. The last company to move forward will be the one left behind. Hence, it is a necessity and generally a good sign to see a company is doing that.