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.

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.

  1. Daily Chart

    A line graph that displays the intraday movements of a given ...
  2. Forex Charting Software

    Forex charting software helps traders analyze foreign currency ...
  3. Growth Of 10K

    A graph that shows the change in value of an initial $10,000 ...
  4. Price By Volume Chart - PBV

    A price by volume, or PBV, chart is a horizontal histogram plotted ...
  5. Linear Price Scale

    A linear price scale is a type of scale used on a chart that ...
  6. Double Bottom

    A double bottom pattern is a technical analysis charting pattern ...
Related Articles
  1. Investing

    TD Ameritrade CEO Focused on the Long Haul

    TD Ameritrade's CEO Tim Hockey said the company is focused on the long haul and deferred details about any return of capital by a quarter.
  2. Investing

    TD Ameritrade CEO: Retail Investors Pouring Money Into Stock Market

    TD Ameritrade's CEO said there is an "enormous" amount of new retail money coming into the stock market.
  3. Investing

    TD Ameritrade CEO: Building Asset Allocation Model Is Now 'Table Stakes'

    TD Ameritrade's CEO says technology is changing financial advising, and the winners will be those who embrace technology to be more efficient.
  4. Investing

    TD Ameritrade CEO: January Trading Activity Off to Strong Start

    TD Ameritrade said that the new year is off to a strong start, with close to 1 million daily average trades.
  5. Trading

    Tips for Stock Charts That Enhance Your Analysis

    Find out how to create well-designed charts that will enhance your market analysis.
  6. Investing

    TD Ameritrade: Bitcoin Futures Trading Stabilized in January With Its Price

    TD Ameritrade's CEO said bitcoin futures trading stabalized in January as the price of bitcoin declined.
  7. Trading

    Introduction to Swing Charting

    Discover why traders use swing charts, how these charts are constructed and how to start using them.
  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 I calculate the production possibility frontier in Excel?

    Learn how to create production possibility frontier curves in Microsoft Excel and understand the importance of production ... Read Answer >>
Hot Definitions
  1. Business Cycle

    The business cycle describes the rise and fall in production output of goods and services in an economy. Business cycles ...
  2. Futures Contract

    An agreement to buy or sell the underlying commodity or asset at a specific price at a future date.
  3. Yield Curve

    A yield curve is a line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but ...
  4. Portfolio

    A portfolio is a grouping of financial assets such as stocks, bonds and cash equivalents, also their mutual, exchange-traded ...
  5. Gross Profit

    Gross profit is the profit a company makes after deducting the costs of making and selling its products, or the costs of ...
  6. Diversification

    Diversification is the strategy of investing in a variety of securities in order to lower the risk involved with putting ...
Trading Center