How Twitter Predicted Apple Stock Movement Before Its Product Announcements

On September 9^th, Apple announced two new iPhones, the Apple Watch and a new Apple payment system. Shares of the company closed with a slight decline after having risen almost 5 percent, in what was a very volatile day for Apple. (See Business Insider for extended coverage of Apple’s announcements.)

But even before the markets opened, the more than usual social chatter around Apple on Twitter forecasted the upcoming volatility in the price of AAPL. The Apple stock continues to be a social media sweetheart, with more than 3,000 tweets about it on regular days. But on the morning of September 9th, there was an unusual uptick in social buzz around AAPL, leading up to a staggering 13,000 messages on Twitter about the stock, just within a 6-hour period. Intelligent anomaly-detection algorithms were able to detect this unusual trend early on; and half an hour before the market opened, messages were sent out alerting investors to the rocky day ahead for Apple.

Sophisticated Computational Linguistic techniques are able to rapidly assess the opinions of thousands of analysts and investors in the matter of nanoseconds, and thus gauge the social pulse of the market. This social market-sentiment tends to be a leading indicator of stock price movements. The significant rise and fall of sentiment around AAPL was clearly reflected in the price 6 hours later.