Facebook Stock Price to Twitter Sentiment Correlation

If you had traded FB Stock the IPO Opening day based on Twitter sentiment signals, how would you have done? Think Twitter could be a valid indicator of Facebook Stock Price?

Probably pretty well! Claims data collection and analysis company Datasift.

They monitored Twitter’s social data and its relation to the Facebook stock price. What they found was pretty interesting: the positive and negative posts on Twitter mirrored the fluctuations in Facebook stock price.

The graph below plots Twitter chatter related to the IPO against Facebook stock prices. You’ll see that every time the volume of negative comments increase, Facebook stock price dropped within 20 minutes – noting an interesting correlation between Twitter sentiment and stock price fluctuations.

Facebook Stock Price day 1 trading: sentiment vs price

Facebook Stock Price

 

In my opinion, it’s always easy to backfill and justify facts based on known data - but if they really want to prove this model they should build a simulation that uses their indicators over a period of time, and publish liquidity results - entry cash vs final cash. If they consistently can demonstrate results it would make a help of a product — hint.

Would be curious to see this graph also since day 1 until today, and try to predict the $25 stock price.

Love this stuff - does anyone use any tools that do this better?