Wednesday, March 16, 2011

Stock Prices Go Hand-In-Hand With Brand’s Social Media Popularity

Social Media and Business
It’s probably time businesses took their popularity on Social Networks seriously. A recent study conducted by Arthur J. O’Connor (a researcher at Pace University) revealed that social media popularity may be a prominent indicator of stock performance.
The study focused on social media analytics (provided by FameCount) of three of the most popular brands on social networks – - Starbucks, Coca Cola and Nike, against their daily stock price movements, over a period of 10 months.
With all the math done (ANOVA,  linear regression etc), the researcher was able to conclude that the daily social media (FacebookTwitter and YouTube only considered here) popularity of a consumer brand is (positively correlated and) directly proportional to with the common stock price of the brand company.
If this proves to be true, and worthy of a risk, then Walmart,  Viacom and Sony – - each of which have seen their social media profiles explode recently – - are the next potential stocks to watch. There are many limitations though.
Correlation between Social Media Popularity and Stock Prices

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