The S&P Dow Jones Indices is monitoring stock Twitter in real-time to see how positively people feel about 200 S&P 500 companies (Tesla) with the top sentiment scores. Today, it launched two Twitter sentiment analysis tools to measure the level of positivity toward companies (or their profit potential) via “$cashtags.” According to the press release, they’ll be given a “z-score” reflecting levels of positivity, quantified in proportion to positive words.
The move sort of institutionalizes meme stock frenzy, though it’s not measuring meme stocks (potentially fun revenge for Reddit’s WallStreetBets to get back at lurkers), only large companies. And it might be a little harder for bands of retail investors to tank Amazon with dunk tweets. If anything, analyzing $cashtag tweets seem more likely to enable whales to screw retail traders throwing money $cashtags and rockets. Large financial firms aren’t sourcing tips from Twitter; CNBC only cares when there’s a social media-generated wave to ride.
Or, in the words of Peter Roffman, global head of innovation and strategy at S&P Dow Jones Indices: “Factor-based indices are a popular strategy for passive investors, so we’re excited to work with Twitter to bring this unique tilt to the S&P 500.” Don’t feed the traders your tweets!
The release also implicitly nods to the GameStop upset earlier this year: “The conversations taking place and opinions being shared on social media have an increasingly significant impact on markets. On Twitter, finance conversations in the US were up more than 26% in 2020 from 2019 according to Twitter internal data, signaling a growing community on the platform.”
If you’re trying to send a stock to the moon, make sure it’s not on the S&P 500. Or stick to Discord. Or run your own Twitter sentiment analysis program.
The Twitter sentiment analysis will only be available to S&P Global Public data subscribers.