## What is a 'Hockey Stick Chart'

A hockey stick chart is a line chart in which a sharp increase occurs suddenly after a short period of quiescence. The line connecting the data points resembles a hockey stick. Hockey stick charts have been used in the world of business and as a visual to show dramatic shifts such as global temperatures and poverty statistics.

Next Up

## BREAKING DOWN 'Hockey Stick Chart'

A hockey stick is comprised of a blade, a small curve and long shaft. A hockey stick chart displays data at low-level activity (y-axis) over a short period of time (x-axis), then a sudden bend indicative of an inflection point, and finally a long and straight rise at a steep angle.

The chart is typically observed in science labs such as in the field of medicine or environmental studies. Scientists, for example, have plotted global warming data on a chart that follows a hockey stick pattern. Social scientists are also familiar with the chart. Some observations about the rate of increase in poverty have been delineated by this shape. The hockey stick chart can command immediate attention. A sudden and dramatic shift in the direction of data points from a flat period to what is visible in a hockey stick chart is a clear indicator that more focus should be given on causative factors. If the data shift occurs over a short time period, it is important to determine if the shift is an aberration or if it represents a fundamental change.

## Business Example of a Hockey Stick Chart

Groupon, Inc. has the distinction of being the fastest company in business history to achieve \$1 billion in sales. It accomplished this in about two-and-a-half years, half the time of even Amazon and Google. Imagine sales of less than \$100K in 2008 and \$14.5 million in 2009. This is the blade part of the hockey stick. In 2010 the company had sales of \$313 million, representing the upward bend or inflection point of the stick. Then in 2011 Groupon generated \$1.6 billion in sales. Plotted on a graph with sales on the y-axis and time on the x-axis the data clearly illustrate a hockey stick pattern. However, as successful as the company may have seemed at the time, the soaring revenues did not mean it was profitable. In fact, net losses in 2010 and 2011 were \$413 million and \$275 million, respectively, due to selling and marketing expenses.

RELATED TERMS
1. ### Daily Chart

A line graph that displays the intraday movements of a given ...
2. ### In The Penalty Box

A phrase referring to a company whose stock has plummeted with ...
3. ### Growth Of 10K

A graph that shows the change in value of an initial \$10,000 ...
4. ### Forex Charts

A charting package that allows a trader to view historical currency ...
5. ### Box Size

The minimum price change that must occur before the next mark ...
6. ### Reversal Amount

The amount of price movement required to shift a chart to the ...
Related Articles
1. Investing

### Is It A Breakout? See The Point-And-Figure Chart

These stocks have broken out of a triple top formation using point-and-figure charting, a bullish sign.
RELATED FAQS
1. ### What are the differences between a bar chart and candle sticks?

Explore the difference between bar and candlestick charts. Learn how technical analysts use charts in the analysis of supply ... Read Answer >>
2. ### How do experienced traders identify false signals in the market?

Learn how traders identify false signals in the market when using indicators and strategies to better identify true market ... Read Answer >>
3. ### What is the difference between a logarithmic price scale and a linear one?

The interpretation of a stock chart can vary among different traders depending on the type of price scale used when viewing ... Read Answer >>
4. ### What Does It Mean When There Is 'Price Action'?

Price action refers to the day-to-day fluctuation in the price of an asset. Read Answer >>
Hot Definitions
1. ### Leverage

Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
2. ### Financial Risk

Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
3. ### Enterprise Value (EV)

Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
4. ### Relative Strength Index - RSI

Relative Strength Indicator (RSI) is a technical momentum indicator that compares the magnitude of recent gains to recent ...
5. ### Dividend

A dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.
6. ### Inventory Turnover

Inventory turnover is a ratio showing how many times a company has sold and replaces inventory over a period.