Social Media Users Love Beer, Really Love Guinness, According to Amplicate

Click for article -> Social Media Users Love Beer, Really Love Guinness…

Amplicate Research -> Love and Hate Relationship…

This article was written on Nov 17 2011 and discusses the results of research performed by a company called Amplicate.  It caught my attention because I believe the tradtional fundamental approach to investing and valuing a company isn’t always the best approach to take when investing. I believe a blend of strategies should be considered including Technical Analysis, Behavioral Finance and Psychology; although fundamental valuation is certainly important.

The article states that over the last year, Guinness had the most “Likes” while Bud Light had the most “Hates”.  The respective company stock tickers we could use to look at them are DEO and BUD respectively.  By using Google Finance and comparing the two securities in one chart, DEO has consistently outperformed BUD over the last yearYet since publication, BUD has outperformed DEO.

Questions:
1. Can social media truly influence the stock price of a company?  For the short term and or long term?

2. Is being “Liked” better or worse than being “Hated”

3. Do you think the large financial institutions are considering data from websites like Amplicate into their analysis?

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4 thoughts on “Social Media Users Love Beer, Really Love Guinness, According to Amplicate

  1. I think social media buzz can influence stock price in the short term, particularly after a new product launches. If you think about Apple and the kind of buzz their new products tend to generate, I can definitely see consumer excitement on social media translating into some kind of effect on stock prices. However, in the end, the actual performance is what will determine the success or failure of the product, which will have much more lasting impact, which will, in turn, influence the long term stock price of a company.

  2. Netflix is a great example which influenced a lot by social media after it doubled its price last year. The company’s stock price declined sharply after the announcement of the new charging standard. I think social media buzz was one of the reason that pushed the changes of stock price, at least for short term.
    Besides, in terms of data from websites like Amplicate, i think it might be helpful for companies to know the public opinions or exposure rate of specific products, which can be useful for marketing decisions.

  3. I don’t think social media necessarily influences stock prices, but it is an indicator of consumer sentiment, which does directly affect stock price. It is a thermometer of sorts to gauge where the company stands in consumers’ minds.

  4. Social media does not directly influence stock prices, what it does is bring a topic/brand/new product to the attention of the reader. From there the action of the reader to research/try/buy/promote a particular brand or product then effects that particular item and the stock, almost a domino effect if you will.

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