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):
- AmEx (AXP)
- Comcast (CMCSA)
- Dell (DELL)
- Ford (F)
- Intel (INTC)
- Jet Blue (JBLU)
- Kraft (KFT)
- Nike (NKE)
- Starbucks (SBUX)
- Wal Mart (WMT)
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
Does Social Media Impact Share Price?
- It’s hard to tell with this data, but it’s encouraging. Especially when you look at the 1 year numbers which are the most favorable.
- Most companies were still experimenting with Social Media 3 years ago. Perhaps it’s now that we see the leaders start to take off.
- This is a simple calculation with companies that were subjectively picked. My prediction is that a good Social Media strategy will soon be a competitive necessity. In other words, it will prevent you from being below the average.