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Rumour has it: Is Twitter’s stock price affected by media speculation?

by | Sep 26, 2016 | Analysis, Business, Company News, Twitter, Uncategorized

Much has been made in the past year regarding the fluctuations in Twitter’s stock price. Rumours have swirled about a possible acquisition, and estimates of a potential price tag have varied widely. Most analysts seem to agree, however, that this rampant speculation has artificially driven up Twitter’s stock price– more buzz, more bump.

But is that really the case? An analysis of the media discussing a potential sale, compared with Twitter’s stock prices since the start of the year show that rumours about a connection between media and stock prices are just that- rumours.

twitter-blog-chart

Though this graph may seem to indicate that an increase in media coverage has driven up Twitter stock in the past few months, a deeper analysis shows that this simply isn’t the case. When reviewing the data over the past three quarters, we find there is no correlation, nor statistically significant relationship between number of articles and Twitter share price.

For the math aficionados out there, our data indicated a correlation of R= 0.067, and a p-value of 0.282. For the math averse, essentially, a correlation is scored between -1 and 1, the closer the value is to 0, the less related it is. Similarly, a p-value of <0.05 is generally considered to be statistically significant, i.e the connection between variables (articles vs. stock price) is too strong to simply be chance.

What does this mean to us? Not only is there no relation between the number of articles published and the value of Twitter’s stock, any relationship we do see is merely an illusion caused by random chance.

Ultimately, there’s no objective way to measure the influence or pervasiveness of a rumour. It is entirely possible that Twitter’s stock rises and falls on the strength of rumour, but we can say with great certainty that sheer volume is not a reliable indicator.

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Myles Leach
Myles has been with Agility PR Solutions since December 2015, first as a lead generation specialist and now as a data analyst with the Media Insights Group. He is the analyst for and author of reports for government departments and large oil and gas clients. Myles has a degree in International Relations from Carleton University.

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