Market volatility blog image

It started with GameStop. Then it was AMC Theaters. Eventually, it happened to Bitcoin and other cryptocurrencies. We’re talking, of course, about instances of corporate share prices surging – and, in many cases, subsequently plummeting – on the backs of conversations playing out across social media. A high-profile figure tweets, or a growing group of regular people band together on a Reddit thread, and a company’s stock goes on a rollercoaster ride, with ripple effects for the company, Wall Street, and beyond.

This pattern has come to epitomize the empowering and connective nature of the internet. But for companies, these incidents can cause great turmoil. We’re using narrative intelligence to show the correlation between online conversations and corporate share prices at a more granular level than simple media monitoring provides. Understanding this correlation can empower risk professionals to detect the narratives potentially leading to the next “meme stock” incident as they emerge – and get ahead of any resulting impact on their business. 

Read our new guide to learn more about how to get ahead of potentially threatening narratives about your business. Reach out to our team to see how businesses leverage Zignal narrative intelligence to control the narrative.

Zignal logo for line break

GameStop Shoots Sky-High

January 2021 was not exactly a slow news month. A new presidential administration took office two weeks after an insurrection attempted to prevent it from doing so. Still, the biggest story at the end of the month had little, if anything, to do with presidential politics: participants in the subreddit r/wallstreetbets had mounted a coordinated campaign to buy up shares of stock in GameStop, sending the company’s share price through the roof. The effects were numerous: the media had a field day, hedge funds that had shorted GameStop lost billions, and the stock trading app Robinhood ultimately suppressed new purchases of the stock, sending the price plummeting just about as quickly as it rose.

Key Takeaway: Narrative intelligence can prepare you for these scenarios.
Don’t be caught unawares as circumstances send your stock price whipsawing up and down. These can have a big impact on a company’s valuation, which can have ripple effects on employee morale and business stability. It’s essential to be ready for these scenarios before they occur. Use narrative intelligence to establish a baseline level of conversation about your business to quickly detect threatening spikes.

The sheer scale of the conversation around the event was something to behold. Narrative intelligence shows that the volume of Tweets mentioning “Wall Street” set a new record with around 2.6 million mentions in the week of January 24 – 30 – by far the most of any week in Twitter’s 15-year history. There were over four times as many mentions of “Wall Street” on Twitter that week than there were during the topic’s previous peak, which occurred during the #OccupyWallStreet protests nearly a decade ago.

Mentions of “Wall Street” on Twitter

Mentions of “Wall Street” on Twitter throughout the platform’s history.

Narrative intelligence also shows the correlation between the conversation playing out online and the near-real-time increase in GameStop’s stock.

Graph showing online convo about GameStop and GME stock

The yellow line shows the share price of GameStop rising roughly in tandem with the company’s Reddit mentions (red line).

Learn more about the GameStop Stock Frenzy in our Labs Report.

Zignal logo for line break

A Bitcoin Boost from Elon Musk

While the world was following the GameStop story, Tesla and SpaceX CEO Elon Musk started tweeting about Bitcoin, eventually changing his Twitter bio to read, simply, #bitcoin. Once that happened, the price of Bitcoin took off, increasing roughly 65% in about three weeks.

This further emphasizes the ways in which the simple use of a free public tool can have a direct, substantial, and nearly immediate influence on real economic indicators that can impact untold numbers of people and businesses. And unlike GameStop stock prices, which dropped precipitously after a fleeting moment above the clouds, Bitcoin has remained high – as of this writing, it was only slightly lower than the peak shown in the chart below.

Chart showing price of Bitcoin related to Elon Musk's Twitter activity

The price of Bitcoin (blue line) surged immediately following the change to Musk’s profile. The yellow line represents Musk’s tweets about Bitcoin.

Learn more about Tesla’s investment in bitcoin, and the ramifications, in our Labs Report.

Zignal logo for line break

Attention Turns to AMC

At a time in which a global pandemic had shuttered movie theaters across the world, a stock surge was probably one of the last things AMC Theaters expected. But thanks to the r/wallstreetbets movement, that’s precisely what has been happening since January. 

Key Takeaway: Monitor a wide variety of digital and social media sources.
In late January, all eyes were on r/wallstreetbets as the stock frenzy unfolded. But top subreddits by mentions over the last month also include r/wallstreetbetsnew, r/wallstreetbetselite, and r/wallstreetbetsogs. If you focus your narrative intelligence only on the most obvious sources of mentions, you could miss new or less visible narratives that could pose a threat. Instead, take a holistic view of the conversation across platforms. 

The graph below shows a strikingly precise correlation between mentions of AMC on r/wallstreetbets and the company’s stock price: The price rises when mentions rise, and falls when they fall. One deviation from this pattern: AMC’s stock was still on the rise as of early March, more than a month after “meme stocks” stopped dominating the headlines. Further analysis with narrative intelligence may shed light on the reasons for this exception.

Correlation of mentions of AMC and AMC stock price

Correlation between mentions of AMC on r/wallstreetbets (yellow line) and AMC’s stock price (blue line).

Head to our press page to see how Zignal’s analysis of online conversations and narratives have contributed to major recent news coverage.