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Is Proprietary Data The Most Valuable? The Stocktwits Example

Author

Howard Lindzon
October 10, 2023

Matt was Chief Data Scientist at Third Point LLC, a leading hedge fund with over $20 billion in assets under management.
Prior to Third Point, Matt headed the Data Strategy team at WorldQuant, a global quantitative asset management firm, where I oversaw the sourcing, processing, and analysis of large-scale alternative datasets. While at WorldQuant, I was part of the founding team of WorldQuant Ventures where we invested in early-stage fintech and data technology companies.

I talk to Matt every day about media, finance, sports and the intersection of data both big and small.

Way back when I started Stocktwits in 2007, I had a vision to create the largest financial community of people that would share ideas and banter about stocks and markets. Matt reached out to me from his position at Worldquant and explained to me the value of the community from a data perspective. Not selling user names and info, just the concept of signal from the stream of activity that happens organically over the days, weeks months and now years.

Flash forward to 2023 with Elon Musk buying Twitter and closing off the API to the outside, Matt just sent his readers an email titled ‘ Is Proprietary Data The Most Valuable’.

I will post it all here below:

There are arguably very few proprietary datasets. Datasets with no competition. Is proprietary data the most valuable asset?

How many truly unique, proprietary datasets exist? Twitter or X, was one of those datasets. They sold at one point the whole firehose or a small 10% sliver of the feed. When GNIP was still around, you could buy keywords. The price was expensive but arguably justified maybe because there was nothing else like it.

Now that Twitter is no longer selling data, or hasn’t decided if they will, or has increased prices tremendously essentially making it inaccessible to 99% of buyers, who will step in and be the new competition? Or will there be Twitter-like products for different niche verticals? Reddit has been known to sell its data and I have heard it has succeeded. What about StockTwits? StockTwits has one of the longest historical datasets, similar to Twitter, but focused exclusively on the markets. They even invented the cashtag $.StockTwits did sell access to the public firehose in the past. Is it time for them to reopen the firehose? Is the data even more valuable now in a world of LLMs dominating discussions? Should every new ChatGPT for Finance be licensing StockTwits? Do the quants want the firehose feed? Or a derivative of the feed? Or sentiment feeds built on top of the feed?

In a world of exclusive, proprietary data being so valuable, I wonder what other unique datasets have been in existence for many years and are under-monetized. Maybe the opportunity is to roll up these undervalued data-rich assets and create a modern data & information services company!

Matt and I have been working with Rishi and the Stocktwits team to create a Stocktwits social data boxscore that people can consume on the Stocktwits website and inside the app. I go there first everyday to check sentiment on indexes and specific stocks and see what tickers are trending and accelerating in followers.

There is no holy grail investing/trading strategy, but there are many new unique and incredible insights that investors and traders can glean from reading Stocktwits. I know I have an edge but do not spend my time trying to trade it or quantify it.

I HAVE started to post a unique way I look at price and popularity with Riley on his new FREE blog under the name ‘Price and Popularity’. You can go sign up for free and follow along.

Have a great day.

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