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Jun 27, 2011

Community centered

IR magazine investigates the burgeoning investment community StockTwits, which is inviting companies to ‘claim their ticker’

While attitudes are changing, the majority of IR professionals remain cautious about social media. That fact was underlined during an IR Magazine Webinar in March, when two thirds of the audience said they do not think corporate blogs and tweets are important sources of information for the buy side or the sell side.

This view is being challenged, however, by the growth of social media sites focused specifically on the investment community – and a micro-blogging service called StockTwits is leading the way.

StockTwits was formed in 2008 by hedge fund manager Howard Lindzon, who wanted a way to collate all the messages on Twitter about stocks and other investments.

Today StockTwits claims more than 150,000 members, and messages posted on the site are disseminated broadly to finance websites like Yahoo! and CNNMoney, as well as professional news services like Reuters and Bloomberg.

As part of the next stage of its development, StockTwits has launched a suite of corporate services to encourage IR departments to begin using the site: companies can now sign up and ‘claim their ticker’, which means any message they post will carry a green tick verifying that it is genuine company news.

Officially launched on June 8, the corporate services suite includes a dashboard to help you monitor discussion about your company on StockTwits in real time.

The launch follows a testing period during which more than 50 companies – including CME Group, Dell, Hewlett-Packard, NetApp and PGi – signed up and began using the service to send out company information.

Site comparison
The move into IR services is being spearheaded by Chris Bullock, who used to head up IR product development at NASDAQ but jumped ship to StockTwits in March this year.

He stresses the difference between StockTwits and other social media networks by quoting a motto used by the site: ‘Twitter is for everyone. Facebook is for friends. LinkedIn is for networking. StockTwits is for investors.’

In many ways, StockTwits is very similar to the micro-blogging site that inspired it. Users are limited to only 140 characters per message, and can ‘follow’ other users whose messages they would like to appear on their personal stream.

On Twitter, hashtags are used to help people search for tweets on a common topic; on StockTwits users place the dollar sign before a company ticker to allow others to find messages about that firm – so messages about Microsoft, for example, include the hashtag $MSFT.

Different strokes
But there are also significant differences between StockTwits and Twitter. Most importantly, StockTwits has a set of house rules governing what kind of messages users can post to the site.

The purpose of this is to keep out stock pumpers and spammers. Messages about anything other than investing are also discouraged, although this rule is relaxed at the weekend, when there is less stock market news to discuss.

‘Our stream is curated,’ explains Bullock. ‘It is focused on quality conversation rather than quantity.’ Early on, StockTwits started blocking messages about over-the-counter and pink sheets stocks, which Bullock says cut out about 80 percent of the spam.

There is also the broader differentiation that StockTwits has a clearly defined audience: investors. Given the rules that constrain discussion, web users are unlikely to even be on the site unless they are investors.

StockTwits further includes a feature to help verified accounts make their news stand out against the endless stream of comments appearing on the site. For verified users, their most recent message will always appear at the top of their ticker page, preventing it from becoming lost in the stream of comments about their company.

Early adopters
CME Group started using StockTwits for IR during the pilot period before the official launch. As a derivatives marketplace, CME sees the opportunity to push its products over StockTwits, but it also sees benefits from an IR standpoint.

The company’s director of corporate communications, Allan Schoenberg, was invited to take part in the weekly #irchat discussion on Twitter, where he explained why he uses the service. He said the best thing about using StockTwits is that it delivers ‘all of this insight/info live, 24/7. That’s of huge value to investor relations.’

Dell, another early adopter, uses StockTwits to engage during the earnings process. For its most recent Q1 results in May, the company posted a slew of messages during its earnings call, highlighting key points.

Just over a week before Q1, Dell also used StockTwits to solicit questions from the investment community for a video blog featuring chief financial officer Brian Gladden and Paul Bell, president of the public and large enterprise business units at Dell.

When it comes to handling questions from StockTwits users, Schoenberg says he doesn’t feel compelled to answer every query, but rather picks his moments. ‘It’s a myth that everyone wants a reply,’ he said in the #irchat session.

‘They want to talk with the community, not us. StockTwits is the community. But I love that I have the option to communicate. I choose my moments and make them count.’

Bullock says companies should not rush into engaging over StockTwits, but should sign up to help them monitor the chatter about their company. He advises issuers new to the site to adopt a three-stage process.

‘First, you should listen and monitor what is going on,’ he suggests. ‘The next stage is to use StockTwits to disseminate information and measure results. The third stage is to engage – and if you are going to engage, keep it to a limited window.’ That way, investors know when they can expect answers and when they may not get a response, he explains.

Compliance fears
Another reason IR professionals have been reluctant to embrace social media is concern about compliance. Corporate information often comes with disclaimers about accounting reconciliations and forward-looking statements. You might wonder: how could you possibly include this in a message limited to just 140 characters?

To help reassure IR professionals on this point, StockTwits is offering companies that sign up to its corporate service a social compliance add-on, for a fee of $99 per month, which appends disclaimers to social media messages and links to third-party sites. This is the first in a number of premium services StockTwits plans to release over the next year.

Perhaps the most significant fact about StockTwits for IR departments is the breadth of its reach. Messages posted on the site are distributed in real time to a variety of financial portals and news services.

On websites like Reuters and Yahoo! Finance, the StockTwits stream is given its own section on each company’s ticker page. On Reuters, this is called ‘social pulse’; on Yahoo!, it’s ‘market pulse’.

It’s important to note that, while any Twitter message including a dollar hashtag is streamed on StockTwits, only messages that originate from the StockTwits site are broadly disseminated to Reuters, Yahoo! and so on – so just sticking a dollar hashtag on your tweet will not be enough to tap into StockTwits’ dissemination network. You have to go to StockTwits and post the message from there.

‘StockTwits has a unique network of financial portals that amplifies social messages posted through our platform,’ says Bullock.

‘This amplification can complement press releases by augmenting their distribution. More importantly, firms now have the opportunity to disseminate information, such as video interviews and SlideShare presentations, that they normally wouldn’t distribute via press releases.’

This article appeared in the July print edition of IR magazine.