Analysis Shows Power of Single Tweet on Blackberry Stock


All eyes were on BlackBerry ( BBRY ) Monday morning; would the deal go to Fairfax (OTCMKTS:FRFHF) or Cerberus Capital Management with Mike Lazaridis and Qualcomm ( QCOM ), or Intel Corporation ( INTC )?

The events were of particular interest to our firm, which measures social sentiment related to stocks. Specifically we look at velocity, which we define as a measure of buzz in the market pertaining to a specific company. Market IQ baselines velocity at 1x. Anything higher than 1x indicates an elevation of interest. (Based on our testing, there is a strong correlation between Market IQ's velocity metric and price volatility.)

On Monday, we sent out our first early signal at 7:20 a.m., based on high velocity (over 3x). This was not unexpected since there was a high level of interest and chatter in the market pertaining to the potential Fairfax buyout.

Some pre-market tweets from reliable users, those tweets that helped trigger the high velocity signal, are illustrated below.

Sent November 4, 2013 at 06:20:34:

  • $BBRY Can Fairfax Close Its BlackBerry Bid?
Sent November 4, 2013 at 07:06:20:
Most interestingly, Michael Babad, news editor and online columnist at the Globe and Mail , hinted a high probability of the deal falling apart at 7:16 a.m. - almost an hour before the news broke.

During pre-market hours, Market IQ's sentiment metric was registering as 64%bearish due to negative chatter and pessimism around the Fairfax deal.

The true strength of lightweight 140-character statements was felt at 08:12:11 EST, when we noted another tweet from Michael Babad stating that BlackBerry had decided not to sell itself and was instead raising $1 billion, and replacing its CEO. This tweet was posted three minutes before the deal was officially announced in a press release by the company.

This was followed by an official tweet from the Globe and Mail newspaper at 08:12:18 EST, which was followed by the first official news release at 8:15 a.m.

Within the first five minutes, by 8:19 a.m., the Globe and Mail tweet propelled through the social-verse to reach over 80,000 people and BlackBerry stock had plummeted more than 20% in pre-market trading.

This commentary is for informational purposes only and does not constitute investment advice. The opinions offered herein are not recommendations to buy, sell or hold securities. Market IQ expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Stocks , Technology

Referenced Stocks: BBRY , FRFHF , INTC , QCOM



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