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article imageEyes on social media: How to detect the next GameStop Special

By Tim Sandle     Feb 1, 2021 in Technology
GameStop's meteoric climb on Wall Street was driven by the actions of ordinary investors, fuelled by discussions on social media platforms like Reddit. What does this mean for the future and the economic power of social media?
GameStop was never meant to see a return to past fortunes (or even to exceed them, as recent, frenetic stock market activity has shown). As Digital Journal's Paul Wallis explains in a detailed analysis of the issue, GameStop "is a bricks-and-mortar business, selling games in shopping malls... places where people used to go before the Big Retail Meltdown and the pandemic."
The massive growth in share price is one thing, but what makes GameStop’s unprecedented 7,200 percent year-on-year increase in share price even more interesting is what is behind it: Social media. While conversations began on the discussion formum Reddit, social media listening data from Sprout Social shows chatter has since extended across social platforms and generated more than 1.5 million Tweets and 1,400 YouTube videos in one week. This is according to data from Sprout Social Advanced Listening platform, sampled between January 20th to the 27th 2021.
Furthermore, inflection points in social chatter have been correlated to stock price fluctuations. In addition, analysis of the listening data shows:
The conversation across Twitter and YouTube had the potential to hit 10 billion impressions.
In total, the conversation about GameStop across these platforms generated around 12.8 million social engagements (likes, comments, shares) in one week.
The spikes seen with GameStop demonstrates a newly established power with social media in terms of disrupting the market.
To look at this further, Digital Journal caught up with Jamie Gilpin, Chief Marketing Officer, Sprout Social.
According to Gilpin: “While competitive analysis, market trends and demand planning can help forecast where a company is going, the spikes we have seen with GameStop and other stocks show that social media can disrupt those models in a moment."
This can be something of value, Gilpin explains: "In the midst of unprecedented volatility, knowing what is being said about companies on social media, before this is reflected in share price, has now become essential to reducing risk and increasing edge."
Furthermore: "Analysts who require the ability to forecast business financials with precision and then change that forecast on a dime as the world around them changes—should be tapping into social as an intelligence tool to optimize the risk/reward calculation that sits at the center of most investment decisions on Wall Street.”
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