Much has been made of Twitter's predictive abilities. Some companies have gone as far as using Twitter to forecast movie openings and elections, and boast of its success. But, when it came to predicting Twitter's success as stock, the microblogging site couldn't have been more wrong.
The Twitter community was divided about the stock's prospects. Our test of 169K tweets revealed that 26% of the comments about the Twitter stock were negative (compared to 34% positive). The social world was effectively scarred by the somewhat recently released Facebook IPO. 9% of all comments remarked on the troubled past of Facebook's opening day.
Others balked at the valuation - referencing its lack of historical profit and wondered how a company in the red could be worth billions. 3% of the posts negatively referenced the valuation and pricing.
What a difference a day makes.
Since the debut of the IPO (and its +73% opening volley), the Twitter community has come to embrace the stock. 50% of the tweets have been positive, and negative tweets have dropped to 25%. This really typifies what Twitter IS good at - immediate reactions to events as they happen. Our analysis caught 54K tweets about the opening day returns within hours of the first trade.
We can really see the real value proposition of social in this example. Twitter offers an instant focus group, giving you real-time opinions on your product; but it's not a crystal ball. The data isn't reliable enough and candidly, as this example shows, crowdsourcing forecasts isn't the best way to make a prediction.
In summary, Twitter is like a bad stockbroker. Unable to commit to risk, but happy to jump on the bandwagon late. While its still the best way to get breaking news, its probably not the best tool for planning your portfolio.