Going into an earnings release, it’s important to know what recent news may be already baked into the stock price and what recent events are being discussed. Blackberry provided a great example on how you can easily look at social media to get context around an earnings release.
On Friday, Sept. 26th, Blackberry released their official results which included a loss of almost $1bln and a decline in revenue of 45%. Despite those dismal results, shares of Blackberry were trading slightly up during the day. How? Those following the stock knew this was because of a partial result pre-release a week earlier and an offer for privatization mid week. This post uses an internal interface we built using Gnip’s new Search API for Twitter to show how social data tells a full story.
A quick general search for “Blackberry” can help easily show whether or not there has been any major news in the week leading up to the call. On the chart you can see multiple spikes in the week prior to the official release.
By zooming in on the spikes and looking through some of the details you can find three major events:
- An earnings/revenue pre-release
- Early talk of a privatization buyout around $9/share
- The full official release of results
Here’s an example of digging into the one of the spikes. I added a second term “earnings” to get more relevant results on the earnings pre-release.
Looking at the price chart, you can see all three events reflected on the price of the stock during the course of the week. A huge hit on the initial earnings release, a recovery rally on the news of the buyout and little movement on the final official earnings release.
Aside from being an interesting example of monitoring news through social media velocity, this example provides a great case study of where understanding investor reactions and volume could be useful but need to be paired with additional information. In this case, stock price movements accompanied the first two high Twitter volume events, but the third event had very little price movement despite high volume and bad news. A strong example of where more analysis is needed to determine if trending news is already reflected in the stock price!