This week we saw the winners and losers shake out from many of the earnings reports that were released for the biotech sector. However, it’s funny how a company can beat earning expectations but still have its stock price move in an opposite direction? To sleep better at night, we need to take a look at all the forcing functions on a stock’s price, including its social media footprint.
Looking at a company’s income statement and balance sheet for earnings is like looking at the final score of a football game after it’s been played. Sure the information is black and white but what really happened during the game/quarter to get there? Did you agree with the coach’s/CEO’s play calling and strategy? Did you develop an opinion or perception before the final whistle blew?
We now live in a very connected world where perception can become reality rather quickly… and it can be good or bad. The good news is that today we can measure perception using the massive amounts of social media data we have. My Social Media Collective Intelligence (SMCI) system ingests 2.4 million financial messages a day to give me a snapshot of the world’s perception at any given time.
Once perception is known, a fuller picture of a company can be gained, which ultimately leads to better trading decisions. If a company does have strong numbers on paper, but the general public has lost trust, faith, and confidence in its leadership or its mission, doubt starts to enter into people’s minds, leading to negative price implications.
Back on September 5, Elon Musk, the founder and CEO of Tesla Motors made comments after a press conference about how investors often “get carried away” with electric car company’s stock price. He then proceeded to say: “I think our stock price is kind of high right now.” In trading that afternoon Tesla’s stock price went down more than 3%. By the end of September it slid more than 12%.
As you can see from the chart outlining TSLA’s stock price over the number of social media chatter messages, the social media sentiment shifted to a very negative outlook after these comments, (red alert circles) forecasting the downward spiral in price.
I’ve identified numerous other profit opportunities just like in my trading Biotech Intel Trader service. If you’re interested in seeing the full picture, check out my trading service .
As always, I’ll continue to monitor the market’s social media collective intelligence and keep you updated on the latest trends.