In our first blog post article in this series we examined the correlation between the frequency of
Bitcoin mentions against the USD price of Bitcoin over time. This post was also very well received on r/dataisbeautiful and led to the feedback that we should look at how Tesla mentions over at r/wallstreetbets link to the price.
r/wallstreetbets is a subreddit that is gaining a lot of media attention lately for being home to a place where discussion and stock tips is causing wild rallies to occur, so lets look at 3 popular picks on r/wallstreet bets and plot their mention activity vs the stock price and see what we
find!
The stocks we'll be looking at
The stocks we are going to take a look at for this analysis are ones that have been getting a lot of mentions lately on r/wallstreetbets:
- SPCE - Virgin Galactic: to quote wikipedia "a spaceflight company within the Virgin Group. It is developing commercial spacecraft and aims to provide suborbital spaceflights to space tourists and suborbital launches
for space science missions"
- TSLA - Tesla Inc: to quote wikipedia "an American electric vehicle and clean energy company based in Palo Alto, California. The company specializes in electric vehicle manufacturing, battery energy storage from
home to grid scale and, through its acquisition of SolarCity, solar panel and solar roof tile manufacturing."
The methodology used for this study
The methodoloy used is basically the same as documented here In a nutshell, we count the daily comment mentions using the PushShift.io Reddit API and plot this against the daily
price of the stock. We skip counting days where the markets are closed. So for Tesla mentions below, we count every comment that contains the word "Tesla" or "TSLA", and so on for the other stocks.
SPCE mentions on r/wallstreetbets vs price
Getting straight into it, here is the graph:
Well well well. There's actually a surprisingly high correlation between mentions of SPCE and it's stock price. What is particularly interesting is comment activity dies down just before the price starts to drop:
Tesla mentions on r/wallstreetbets vs price
Let's look at another WSB favourite, Tesla:
What's interesting about this one is before the biggest price move there is a very significant spike in comment frequency. Additionally the comment frequency starts dramatically falling just before the price falls:
Conclusion
So do stock tips and discussion on r/wallstreetbets cause "wild rallies" in price as reported yesterday by Bloomberg? . I think the jury is out on that one being conclusive, but the data definitely suggests something interesting is going on and perhaps the power of 900,000 Redditors is something to be reckoned
with.
Support
Your support in retweetng our article is always appreciated! If you would like more stonks to be analyzed, perhaps PLUG or something else, feel free to tweet at us:
Thu, Feb 27, 2020
David Gilbert