Twitter can be a massive platform for discussing stocks and other fiscal instruments and will most likely replace bulletin boards like the ones at Yahoo! Finance as the preferred strategy for debating individual public corporations. The dimensions of the Twitter audience makes it possible for groups interested in one stock to post views on that company, trades, research, rumors, and information directly from the company in real-time. A stock with a massive investor base may have a following that brings in thousands of comments a day. This sort of “Info market’ for stocks has started to appear through services like StockTwits.
Communities of active stockholders and day-traders who are sharing opinions and in some case classy research about stocks, bonds and other financial instruments, will essentially have the power to move share prices. In the cases of some smaller and more thinly traded stocks, this power may be used to spread rumors and influence trading patterns. A discussion around a certain stock is highlighted on Twitter by using the $ in front of a stock symbol, in the same way as the hashtag (‘#’) is used for keywords.
At some point central government agencies like the SEC are going to need to investigate how Twitter users access the service to spread info about public firms. A few of these comments are probably going to be deemed misleading as is true on bulletin boards today, because some speculators will attempt to move share costs up and down based primarily on their volume of messages and the messages that they can get their followers to tweet. As this function of Twitter usage grows, the community of analysts on any one publicly traded company may become almost as massive as its stock’s daily volume, making Twitter-based input as vital as any other info on many stocks. Yahoo and other large bulletin boards may begin to supplement their services using Twitter, extending the power of the medium to pass along info whether it is correct or not. Twitter is one of the most disruptive technologies to become part of the financial markets in many years.
It will permit individual and professional investors to exchange many thousands of bits of info about the markets in surprisingly short time periods. The issue will be that a great amount of this info may not be correct.
For people who don’t have cash to put into the market, Twitter will be the ultimate platform for fantasy stock trading in which people post the price at which they would have acquired or sold a stock. That might become part of an enormous contest among Tweople who need to compete with each other to show who can create the best performing portfolio, even without cash.