Are social media platforms reliable sources of business news?
This is an important question given the reach and influence of social media platforms in the 21st century. Twitter has 400 million users and Facebook currently has 2.9 billion active users. The LinkedIn corporate network has 756 million users and YouTube has 2.3 billion users. Almost half of Americans read the news on social media. This says a lot about the amount of information available and the need to connect and stay informed.
Most major financial news outlets are active on social media, and it’s not uncommon for traders to hear market-moving news first on Twitter or Facebook. But no matter how quickly news spreads on social media through sharing and commenting, there are big differences between a qualified news source and an unqualified news source.
Just as important as the news itself is the market’s reaction to the news. Market reactions can be reflected in real time on social media platforms, providing important insights into the human factor and the emotions triggered by sudden changes.
Since social media has become an integral part of mass media and some of them, such as B. Meta platforms are mega-cap stocks, here are three ways for a beginner to approach financial news on these platforms.
1. Consider the quality of the source
It is important to check the quality of the source and ask whether the information comes from an established financial publication or another reliable source. If the message is important enough to spread, it will be shared on thousands of accounts. Check the article to make sure it comes from a qualified source as they are required to check their reports to confirm factual accuracy.
Once you find the original article, research the cited sources to understand how factual they are. For example, in an article about whether Elon Musk will leave Twitter, the main source would be a direct quote from Elon Musk about his decision.
Currently, Elon Musk is the CEO of Twitter and has an account followed by more than 100 million users, which means that tweets are a primary source of information about the entrepreneur. One of the issues is making sure that the account you are following is the real Elon Musk account as there are many parodies and imitators out there. This is a common problem on all social media platforms and should definitely be checked when reading financial news. After all, this business leader also runs another blue chip stock – Tesla Motors – which is why it’s important to follow the authentic Twitter feed.
2. Prejudices – mirror or window?
There are two sides to bias when looking at information. One side is bias that comes from the opinions of social media users, the other side is viewer bias. Filtering facts through the sieve of becoming aware of one’s own and others’ biases can be helpful in uncovering nuggets of market-relevant information.
For example, a recent story about Facebook founder Mark Zuckerberg’s vision for the metaverse garnered countless opinions from watchers, VR experts, and tech publications. These opinions are likely to be shared on the publications’ social media accounts, some of which may be influential. While the opinions may be valid, they can be verified by checking out Mark Zuckerberg’s Facebook account for information straight from the source.
Mark Zuckerberg also posts through the meta-platform’s other social media channels – WhatsApp and Instagram. The posts are a window into the company’s strategy and a reflection of his goals as CEO. Some of Mark Zuckerberg’s posts could affect the company’s share price, so it’s worth keeping an eye on his Facebook updates.
3. Geopolitical and public health events
Geopolitical and public health events can move markets, and in the age of social media, news often comes from the grassroots, from people living in the affected country. For example, the impact of COVID-19 on various communities has been widely publicized on social media. Attention has been drawn to food shortages as supply chains have been disrupted. Another example is the distribution of vaccines by big pharmaceutical companies.
The information you find on social media can be checked with Google News and confirmed by reading at least one other reliable source. This could be the original press release from a pharmaceutical company or an article from an established media outlet.
In summary, social media platforms are an important source of business information provided you cross-check them with other reliable sources and are aware of the possibility of bias and misleading information from fake accounts.
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This document does not constitute and should not be construed as investment advice, an investment recommendation, an offer or a solicitation for any transaction in financial instruments. Please note that such items are not reliable forecasts of current or future developments, as circumstances are subject to change. Before making any type of investment, you should consult an independent financial adviser to ensure that you have a good understanding and assessment of the risks involved.