Does Social Media Affect a Company’s Stock Price?

Stock Price is the ultimate metric for a company looking to evaluate a business strategy.  When thinking about Social Media Strategy, a company can choose from many different metrics to evaluate their efforts. Ultimately, we will have to stock price at those companies with good Social Media to understand whether or not Social Media is the management breakthrough we’re all hoping for.

So, does Social Media affect stock price?  It might be too early to tell, but I wanted to see what I could learn.  I consulted some of the “Best of Social Media” lists from Mashable, Forrester, and Groundswell, and came up with these companies.  When people ask me, “Who is doing it right?”, these are usually the companies I’m thinking of (Feel free to add other suggestions in comments, and I’ll compile the numbers):

Then, I compared their 1, 2, and 3 year annualized return (CAGR) to market benchmarks (in green) like the Dow Jones Industrial Average, S&P 500, Russel 2000, and Nasdaq Composite.  Below are the results.

Stock Returns of Companies with “Good” Social Media Examples

1 Year Annualized Return

1 Year Annualized Return

2 year annualized return of companies that use Social Media in their strategy

3year

Does Social Media Impact Share Price?

2 Responses to “Does Social Media Affect a Company’s Stock Price?”

  1. Study Claims Stock Price, Social Media Are Linked :: I Like Payday - March 22, 2011

    [...] Ben Foster has also done some informal work examining stock prices and social media metrics. [...]

  2. William Price - March 28, 2011

    I think everything here in this world can be affected in good and bad things by Social Media network. But we all know that we can use social media to help ourselves if we just use this carefully and with intelligence. There are many ways to make Social media help us to succeed.

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