3 Stocks That Need to Follow Elon Musk’s Rebranding Moves

I don’t know if you’ve been following the Elon Musk rebranding of Twitter. He’s now calling it “X” and plans to turn the social media platform into a super app where you can do just about everything.

“In the months to come, we will add comprehensive communications and the ability to conduct your entire financial world. The Twitter name does not make sense in that context, so we must bid adieu to the bird,” Musk stated in a July 24 post.

Time will tell if the eccentric billionaire made the right call.

In the meantime, it’s important to note that corporate rebranding is risky because you potentially alienate your core customer. Twitter/X is already losing hundreds of millions of dollars. Alienating customers further would be a death sentence for the social media platform.

However, the impact of rebranding on stocks can be positive for shareholders. Investopedia pointed out that in 2007 Steve Jobs changed the name of the iPhone maker from Apple Computers to Apple (NASDAQ:AAPL) to reflect that the company was more than just computers. Oh, how right he was.

Here are three companies that ought to be following Musk’s lead.

Gap (GPS)

I can name at least three companies that have changed their corporate name to reflect the diversity of their holdings: Capri Holdings (NYSE:CPRI), Tapestry (NYSE:TPR), and Driven Brand Holdings (NASDAQ:DRVN). They haven’t suffered by changing their name to reflect their multi-brand status.

Yet, Gap (NYSE:GPS) continues to go by its legacy brand, even though other brands in the company are better growth vehicles. Rather than continue to remind investors how much of a disaster the Gap brand has become, it should create a name that implies a future with authentic growth brands.

That’s it: Retail Growth Brands Inc., or RGB, just like the late, great Supreme Court Justice Ruth Bader Ginsburg.

How bad has it gotten at the Gap group of companies?

They replaced former Chief Executive Officer (CEO) Sonya Syngal with Richard Dickson, the former president and CEO of Mattel (NYSE:MAT) and the man behind Barbie’s revival. At Athleta, its once-promising athleisure brand, it hired Chris Blakeslee, the former president of Alo Yoga.

Given how many women work at the four major Gap brands, it’s beyond crazy the board couldn’t find a qualified woman to lead the entire company.

That tells you all you need to know about the dysfunction at Gap. No wonder it’s traded under $20 for the past 20 months.

Rollins (ROL)

Source: Shutterstock

Rollins (NYSE:ROL) is a company I’ve recommended to readers over the past few years. In 2016, I included the pest control company in a group of 10 stocks I thought every retirement portfolio should have.

“Over the long haul, it hasn’t disappointed delivering 18 consecutive years of earnings growth and 14 consecutive years of dividend increases averaging 12%,” I wrote in May of that year.

The stock is up around 235% in the years since. However, its stock’s become much more volatile since the pandemic started in early 2020. Year-to-date, it’s up 11.7%, trailing the S&P 500 by over 800 basis points. One thing to remember about that lack of performance: Most of the index’s gains are from the “Magnificent 7,” the tech stocks all benefiting from artificial intelligence.

Take out the Mag 7, and Rollins’ returns look just fine.

On July 26, the company reported healthy top and bottom line growth. Its revenues were $821 million, 14.9% higher than a year earlier. Excluding acquisitions, its revenues were up 7.7% year-over-year. In terms of net income, it earned $114 million on an adjusted basis, 12.2% higher than Q2 2022.

With industry-leading brand names such as Orkin and Critter Control, the Rollins name says little about those businesses.

GameStop (GME)

Source: shutterstock.com/EchoVisuals

GameStop (NYSE:GME) and AMC Entertainment (NYSE:AMC) are two meme stocks that I will not recommend to any investors. They are ridiculously overvalued and represent everything bad about the current investment environment.

However, I don’t have a problem recommending that the video game retailer rebrand to something other than GameStop. This legacy name is like a chain around its neck, constantly dragging it down. Serious investors will continue to keep it off their watchlists.

It doesn’t help that the Chewy (NYSE:CHWY) co-founder and GameStop savior, Ryan Cohen, keeps mowing through senior management. CEO Matt Furlong was shown the door in June after two years in the top job. On July 27, former chief financial officer (CFO) Diana Saadeh-Jajeh resigned after just a year.

GamesIndustry.biz managing editor Brendan Sinclair wrote a scathing piece about GameStop in June. If you’ve got any thoughts on buying GME stock, do yourself a favor and read his article. It’s spot on.

Sinclair’s strongest point is that the company has known for years that its days selling video games through brick-and-mortar stores were done. Digital was the only way. Yet, it continues to sputter on that front.

“But the idea that Cohen has a brilliant plan to fix everything in one fell swoop is simply not credible. He’s essentially been in charge for years now, the fundamental business is still the same, and the user experience online or in-store is not meaningfully better. Bafflingly, it may actually be worse.” Sinclair wrote on June 9.

With $1.3 billion in cash on its balance sheet, it’s got plenty to do a full-scale rebrand. Unfortunately, as Sinclair pointed out, it’s likely far too late.

On the date of publication, Will Ashworth did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.