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Tracking Stock
Term category: Stocks
In 10 words or less: A stock that tracks the performance of a company's division.

Definition: A stock that tracks the performance of a particular division within a business.

StockJargon Advice: When a parent company issues a tracking stock, all the financial information is removed from their balance sheet and income statement and separated into its own information.

Why would a company do this? Sometimes a high-growth division will have large losses and won't be representative of the parent company. By spinning it off as a tracking stock, it can attract more aggressive investors and improve the financials for the parent company (by removing the losses from that division).

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