Analyzing the Effect of Social Media Sentiment on Stock Prices


  •  Lemel Rosa    

Abstract

As consumers increasingly use social media to find out about a company and its products, the sentiment of that social media become even more important. This study is exploratory in nature, the aim is to determine if social media sentiment influences the stock price of large global companies. Stock prices and annual revenue was measured for Dow 30 stocks at two time periods six months apart. Social Media sentiment is more difficult to measure. In this study the sentiment ratings from Social Searcher.com were used to indicate whether social media messages by the public are positive, negative or neutral. While past studies have focused on either Facebook or Twitter messages, this tool aggregates messages from eleven social media platforms globally. In conducting this study numerous limitations and recommendations for future studies became apparent. The value of this exploratory study is in the flaws exposed by conducting this study. This provides a rich template for future studies on social media sentiment and its effect on a company.



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