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Social media predicting stock?

April 14, 2011

Would you predict the success of a company’s stock based on twitter followers? The Wall Street Journal recently released an article about a researcher, Arthur O’Connor who believes that for some companies it could be a possibility.


The idea is that based upon how many ‘likes’ on facebook or followers on twitter, predictions can be made on how customers will act.

O’Connor conducted a pilot study with three companies- Starbucks Corp., Nike Inc. and Coca-Cola Co. for a 10- month period. Although each company had different returns, his findings were true to his predictions. He claims that more tests would have to be performed in order to prove predictions for shares more fully though.

I’m not sure his findings give us much proof. What do you think, could this be in our future, using social media for the stock market?

The article also explains that it may only work for certain companies, more specifically those who cater to consumers. To read more about the idea go to Wall Street’s site.


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