IR Community Debates Social Media’s Role in Equity Research
I missed this week’s #irchat. As I was reading through the transcript (which can be accessed here), I thought I would transcribe the discussion for the benefit of everyone.
Typically, three or four questions are asked. But this week, the first question dominated the hour-long session. @meetthestreet asked:
Q1: Institutional Investor recently wrote about social media’s role in equity research: http://bit.ly/94w06K. Do you think this has legs?
Here is a snippet from the article:
Bolstered by the low cost of online publishing and the rising popularity of blogs, discussion forums and commenting, a growing number of niche web sites are creating opportunities for new forms of investment analysis to emerge — and for buy-side professionals, even those at rival firms, to collaborate and learn directly from one another. These social media web sites are supplementing, and in some cases supplanting, the traditional Wall Street information ecosystem that transmits sell-side investment research and stock calls to the buy side.
Here’s a recap of the conversation (a subset of questions evolved from the original question, so I have grouped these together to make it easier to follow along):
- @meetthestreet: “SumZero has attracted 4k institutional investors in 2 years in pure organic fashion. I think that there is something here.”
- @thomasros: “I like the “democratizing of information” idea of SM.”
- @SculptorIR: “Definitely think this trend will continue, as the market wants more information about market drivers.”
- @AVGoldberg: “Intuitively believe SM trend is here to stay but contradictory 2 analysts claim of limited access thru work & not using it.”
- @meetthestreet: “I know the founders of SumZero. I wonder if they can tell if their users are using it from home? I will ask.”
- @mcjennings: “Sounds like buy side analysts do have access to these specialized sites–sumzero, val invest club, distressed debt invest club.”
- @meetthestreet: “If SumZero grows 2 B 20k or 50k buyside they will B able 2 easily move markets & IROs don’t have the same transparency as w/ SS.”
@meetthestreet: “Any thoughts on how they could monetize their offering? This will be important to their long-term viability.”
- @meetthestreet: “Now institutional investors have 2 submit 2 ideas per year 2 gain access 2 the research pool. How can SumZero make $ from this?”
- @trevorheisler: “Implementing a paid subscription service would make sense to me.”
- @mcjennings: “If they are looking for revenue model, charge IROs for access, which will be necessary in some way shape or form.”
@meethestreet: Do you think that closed research networks pose a challenge to IROs as they become more popular?
- @SculptorIR: “Yes”
- @fredmcclimans: “Agree that closed research networks pose a challenge to IROs, but also a potential captive audience at some point?”
- @fredmcclimans: “How locked out are firms/IROs from SumZero? Any access at all? Or is data totally locked for all time?”
- @meetthestreet: “SumZero confirms users & only lets buyside in. Closed network. Plus its a 1 2 many network which can’t B managed/influenced by IROs.”
@trevorheisler: “Would you consider something like Covestor to be in competition with SumZero?”
- @meetthestreet: “I don’t think so. Covestor is a retail product. If you want to invest alongside best investors, then invest in their funds.”
- @trevorheisler: “Right. Guess a better question is, should SumZero go after retail as well, with a paid subscription?”
- @fredmcclimans: “IRO could then pose as retail investor?”
- @meetthestreet: “Agreed RT @fredmcclimans: RT @trevorheisler: Should SumZero go after retail as well, w/ a paid sub <iro could then pose as retail investor?”
As usual, the hour went by quickly. I’d love to hear your thoughts about the discussion!
Don’t forget to join us every Thursday @ 11:00 a.m. EST. In the meantime, if you have any questions you’d like to submit for an upcoming #irchat, tweet @meetthestreet or send an email to sherylj@q4websystems.com and I’ll pass it along.
Related posts:
- An IR perspective “Equity Research in the Age of the Web”
- Equity Research Analyst Weighs in on the Social Web – podcast
- Leveraging Technology: Online Communications and the Role of Social Media
- Role of Social Media in Performance Reporting
- IR Community Weighs in on Valuation placed on Good vs. Bad IR programs
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