Can Facebook Popularity Predict Stock Prices?

A brand's popularity on Facebook just might predict how the company's stock moves.

A brand’s popularity on Facebook just might predict how the company’s stock moves.

A so-called pilot study by a doctoral student has found a correlation between a brand’s fan count and stock performance.

The research uses Famecount‘s measurements of Starbucks, Coca-Cola and Nike on social media and compares them to stock prices.

The study’s author, Arthur O’Connor, a PhD candidate at Pace University, said:

By using social network popularity data on three major consumer brands, we were able to reliably predict their respective daily stock prices over a 10 month period – during which the stocks of the companies experienced radically different returns, with Starbucks climbing 29 percent, Nike appreciating by 14 percent, and yet Coke declining by nearly 6 percent – even when the social media data was lagged by as much as 30 days.

This study’s conclusion seems pretty logical, but the research would take on more authority by studying more brands, over a longer period of time. We suspect that the less consumer-facing the brand, the weaker the correlation might be between stock performance and social media popularity.

Readers, what’s your opinion of these findings?