Fast acting information distributed through social media sites like Twitter can improve investors’...
The Power of Portnoy: A Case Study on a Influencer and Spirit Airlines
In a recent turn of events, the U.S. Department of Justice intervened, blocking the proposed merger between Jet Blue and Spirit. This decision sparked concerns of bankruptcy, triggering a short interest from major funds. However, amidst the chaos, a social media whirlwind began as Dave Portnoy, the founder of Barstool Sports, also known as Davey Day Trader, took to Twitter to influence the stock market. This blog aims to dissect and analyze the profound impact of Portnoy's tweets on the subsequent surge in social sentiment and the movement of Spirit Airlines' stock ($SAVE).
Context Analytics (CA) is the leader in processing and structuring textual data for sentiment analysis. CA ingests data from a variety of sources including Twitter, and grades the sentiment from tweets, aggregates them over a 24-hour period, and compares it to a historical baseline of 20 days to create S-Factors. The S-Factor feed is one of Context Analytics' longest-running products and includes the S-Score, which is a description of how positive or negative sentiment is by security.
S-Score gives a cross-sectional view of Social Sentiment without bias toward message volume because the security’s sentiment is being compared to its historical baseline. S-Score values are statistically significant above 2.0 and below -2.0.
Over the next three market days, he bombarded Twitter with over 30 tweets, consistently tagging $SAVE and encouraging others to join the investment frenzy. Visualizing the real-time effects, we highlight Portnoy's tweets in blue against the backdrop of the entire Twitter sentiment surrounding $SAVE.
Our data reveals a remarkable surge in sentiment, peaking at over 4 on a standardized scale. The influx of Portnoy's tweets played a pivotal role in driving this surge. It is noteworthy that the dip in sentiment during the weekend was attributed to typical market behavior. However, Portnoy's pre-market tweet on Monday reignited the sentiment, soaring to over 2 once again. Our research has shown that these high consistent sentiment scores often correlate with positive subsequent stock returns. You read more of our research HERE.
The correlation between Portnoy's Twitter activity and the stock price movement of Spirit Airlines is evident. From the moment of Portnoy's first tweet to his last regarding $SAVE, security experienced a remarkable surge of over 40%. The blog underscores the power of Twitter influencers, particularly Dave Portnoy, in shaping mass social sentiment and influencing stock price dynamics.
In a landscape where social media influencers hold substantial sway; this blog serves as a testament to the tangible impact of Dave Portnoy's tweets on the stock market. S-Score presents investors with valuable insights into discerning when social media noise transforms into a force capable of influencing stock prices. As we navigate this evolving financial landscape, understanding the dynamics of social media influence becomes crucial for making informed investment decisions. Contact us to equip your firm with the necessary tools to trade with or hedge against influencers in the market.