Time and again, there is speculation about the power of social media in our everyday lives. It has long been known to companies that Twitter, Facebook or YouTube can have a major influence on customers' purchasing decisions. And even the image can be positively influenced, but also destroyed within a very short time via social media. What is new, however, is that Twitter & Co also have an influence on the development of share prices.
Colt Technology Services conducted a survey last year, the results of which gave social media a new meaning: Public expressions of opinion on social networks such as Twitter or Facebook can have an impact on the course of share prices.
Twitter & Co.
Individual share valuations are influenced by Twitter & Co.
The company found out: 63 percent of the participants in the study are convinced that public statements and posts on the networks have an impact on the valuation of shares.
By way of background, the study participants consisted of stockbrokers on the one hand and executives of companies in securities trading on the other. They were therefore industry experts who shared their opinions here.
Almost 50 percent of the participants believe that there is a subordinate influence on public sentiment. And as many as 7 percent attribute a greater role to social networks: namely, they use them as an early indicator for the development of share prices.
Social media as a new working tool for hedge funds and trading houses
This assumption also has an impact on the work of hedge funds and trading houses. They use social media for their purposes by sifting through media data and categorizing status updates and tweets according to different sentiment patterns. Algorithms or strategies from high-frequency trading thus enable them to optimize their trading orders and gain margin advantages over traders using traditional means. Social media has thus become an important tool for working on the stock exchange.
In an official press release, Dr. Jürgen Hernichel, member of the board at Colt, assesses the developments as follows: "In a market where liquidity counts but investors act cautiously, new ways of securing a competitive edge are always welcome. But to incorporate social media and data mining into trading strategies, the key is to quickly process the information gleaned from millions of status updates."
Use Twitter, Facebook & Co only as a supplement to get information about stocks. As interesting as these new opportunities are, they are also risky - at least when viewed in isolation. The classic ratios are still the first choice here.
The most important points at a glance:
Not only purchase decisions are influenced by Twitter & Co. Individual stock valuations in https://exnesslatam.com/conversor-de-divisas/ can also be made dependent on tweets and status updates.
Hedge funds and trading houses evaluate the data in social media and categorize the sentiment pictures. Social media thus becomes a working tool for stockbrokers.
However, the flood of data still makes it difficult to evaluate overall.
Investors can use social media to obtain further clues about a company. In principle, however, there are more important valuation indicators when selecting shares.