Social Momentum and Price Momentum in Arena Pharmaceuticals
- Posted by ppearlman
- on June 19th, 2012
Over the past 3 months, social volume has increased by 4231% in Arena Pharmaceuticals. This is by far the largest increase over this period and one of the highest levels of social momentum that we have seen since we began tracking the metric.
$ARNA continues to dominate discussion in the Healthcare sector as evidenced by the 24 Hour Social Heatmap which visualizes the discussion level relative to other tickers in the Healthcare sector.
Here’s a weekly StockTwits message volume chart for $ARNA over the past 5 months showing the large increase in $ARNA message volume beginning with a February bump, followed by a March spike, continued increased volume and then a humongous spike the first weeks of May.
So social interest in the stock was not only increasing over the first half of the year but that increase accelerated through May before leveling off more recently at a higher level, by orders of magnitude, than we observed over the first 2 months of the year.
Investors and traders are incredibly interested in $ARNA and focused on every detail related to the company, its expiremental drug pipeline as well as its price performance.
Finally, here is the $ARNA 5 month price and volume chart. Since January, the price of the stock has increased 6 fold from 1.65 to the 9.9 spot as of 10AM June 19th, 2012.
Clearly, there’s something happening here as a striking positive correlation exists between social momentum and price momentum.
Even though social momentum has led price momentum it is impossible to determine a causal relationship but the message volume data appears to be a leading indicator and perhaps an operative variable of a positive feedback loop involving social interest, price and volume.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Phil is the executive editor of StockTwits and an investor in the company. He is a partner at Social Leverage, LLC and makes early stage investments in web based companies. (More)