The crowdsourced prediction was inspired by a tweet from investor Chris Sacca, in which he wondered if a crowd could accurately predict the closing price of Facebook during its first day of trading. Programmer James Proud put up a website called Facebookipodayclosingprice.com to find out. He accepted 2,261 predictions from anyone who wanted to make one.
The result? Submissions, solicited mostly via Twitter, predicted on average that Facebook's stock price would soar from the opening price of $38 to $54.
The reality? Facebook's stock gained a measly $0.23 during its first day of trading.
Only 26 people correctly predicted that Facebook's stock would close at about $38, and crowdsourced predictions unsurprisingly gained no clout as tools for predicting stock prices as a result of the experiment.
Another analysis, however, says that Twitter sentiment correlated with how the price turned throughout the day.
In an examination of tweets that were published Friday related to the Facebook IPO, Social media data firm DataSift found that every time the volume of negative comments increased, Facebook's share price dropped within 20 minutes. Conversely, when positive sentiment increased, the share price rose within a short timeframe.
But don't start basing your trading decisions on Twitter sentiment just yet.
Though the analysis is not the first to find a link between Twitter data and stock price, its authors aren't willing to call it any more than "an interesting correlation between Twitter sentiment and stock price fluctuations."