Twitter gets advisers in-the-know in real time

Twitter isn’t just an innovative way to connect with prospects and clients — advisers can pick up a lot about a company, and investor sentiment related to its stock, on the social media channel.

That’s why the Nasdaq stock exchange has partnered with Market Prophit, a social media analytics company that rates financial pundits on their commentary, to analyze how tweets affect a company’s stock.

While applying big-data analytics to social media content may glean interesting insights on the markets, there are caveats. The repercussions from a single tweet could escalate so quickly that a stock price will be affected within minutes, if not seconds. Twitter, for example, saw its stock price jump last week in response to a fake Bloomberg News story stating that the company was being taken over.

“Just as with anything else, whether it is people reading tweets or machines reading tweets, we have to be careful,” said Dave Gerdt, senior adviser at the Hultquist Firm Advisors. “You think of the huge amount of bogus news stories that get shared on Facebook, [such as] reports of people dying that haven’t really died.

“That’s what you open yourself up to,” he said. “You just have to have a heightened sense of skepticism.”

Even still, Twitter can be a powerful tool when stock-picking giants like Carl Icahn and others tweet.

Morgan Downey, chief executive of Money.net, a stock data analytics platform, said investors are finally in-the-know about the stocks that make up their portfolios, and advisers need to keep up too.

Sold last of our $NFLX today. Believe $AAPL currently represents same opportunity we stated NFLX offered several years ago.

— Carl Icahn (@Carl_C_Icahn) June 24, 2015

“What financial advisers need to be aware of is what’s happening to the holdings for clients,” Mr. Downey said. “They need to monitor social media because you have markets moving because of social media.

“The power of a single tweet could be worth billions,” he added.

(More: When deciding whether to be bullish or bearish, follow Twitter’s lead.)

Ross Gerber, chief executive and an adviser with Gerber-Kawasaki, said what sets him apart from his colleagues is that he uses Twitter all the time to talk about his stock picks and to find breaking news.

#stock market insanity continues. Amazon soars on decent earnings. Something is better than nothing $amzn Starbucks reports a good qtr $sbux

— Ross Gerber (@GerberKawasaki) July 24, 2015

Companies can really differentiate themselves, and affect their own stock prices, by allowing executives to tweet key information. Mr. Gerber noticed that with two companies in particular: Tesla and T-Mobile, both of which have vocal executives. T-Mobile’s executive even uses Periscope, which is a real-time video-sharing app.

“It is one of the reasons we own [T-Mobile stock],” Mr. Gerber said. “We have a better connection to what he’s doing than any other company.”