A small percentage of Twitter messages, or tweets, make sense from a business standpoint, but the financial services community cannot deny that the microblogging holds big implications for their firms.
Financial services firms, then, need to take down barriers between their employees and the social media tool, to become part of the conversation, Howard Lindzon, founder of trading and investing Internet forum StockTwits said during a presentation at the Social Media Day conference in New York on Wednesday. Finextra, an independent news service for the financial technology industry, presented Social Media Day, along with other media hosts and industry sponsors.
“People are talking about your company, they are talking about your stocks,” Lindzon said during the presentation. From that standpoint, financial institutions should be aware of what investors are posting about their firms to sites like Twitter. They should also know who is among the followers, Lindzon said.
Although Twitter lacks depth as a business tool generally speaking, it can be tremendously useful to media and financial services forms, because of its quick-blast broadcast format. “There is no doubt that Bloomberg was freaking out about Twitter,” Lindzon said. “In the financial world, news matters.”
Lindzon, who ran a hedge fund for 13 years and has invested in several Internet startups, including the predecessor to Rent.com, launched StockTwits to allow avid traders to exchange ideas about stocks.
“Guys love talking about stocks,” he said. Lindzon says that about 30% of its users are professional investors. Not all of the users actively chime in on what others are saying about a particular security, but they like to listen in. That speaks to one of Twitter’s strengths—letting users simply eavesdrop.
Lindzon himself has bigger plans for StockTwits. The company is working on adding features that conform to Financial Industry Regulatory Authority compliance standards, so that registered representatives can have more open conversations. The company hopes to launch those features in the next couple of weeks. Also, the company is trying to give StockTwits a broader format, so that it has seems more like a social networking site like Facebook.
Ultimately, Lindzon said, Americans who Tweet and update their Facebook pages will move toward aggregating and analyzing feeds on their sites.
“That is going to lead to longer periods of lower volatility, as information gets disseminated quickly, and people figure out what it means,” Lindzon said.