1. Social Media
By NJ, HC, PA
900 million users
500 million
users
400 million
users490 million
users
2. What is the issue
Social media can have positive and negative impacts on the ASX. Social media is
an extension of news. News affects markets. Social media makes news have
more reach (more impact), faster (more sudden impact) on markets and can last
for longer cycles. You now have more famous people/personalities in this
ecosystem. They have opinions and they have followers, they arguably have
power whether or not they realize it or choose to use/abuse it. Also, it's not
uncommon for hackers and other clever people who are not famous (or even
anonymous) to misuse marketing campagins or other projects for their own
purposes. These can all have negative impacts on a company’s share prices
because it publicises them in a bad way.
3. How it affects different investment options
More than 50% over all users of social media
are influenced by both positive and negative
comments and posts about brands or
companies on social media sites. What this
means about investing is that, if a negative
post goes up on facebook and becomes viral
about Adidas more than 450 million people
will be influenced by this post and this could
lead to a decline in share price of adidas and
vise versa. Posts on social media can impact
companies earnings (earnings drive share
price)
4. Who benefits
Depending on what happens on social media can impact the outcome of who
benefits from a post on social media for example if a company has many people
leaving positive comments on their social website this could lead to more people
knowing and using this company as it will start to get a good reputation online and
in real life. The outcome of this is that this particular company will gain sales and
could possibly see a boost in share prices. However social media channels are
weak at improving advisors’ client retention. Just 9% said that it had a significant
impact, while three times that many said that it had no impact.
5. Who loses
The Companies that are being publicised which negatively impacts their market
prices. For example when BHP had the dam burst in Brazil there were many
“memes” that were made and went viral, which definitely affected the businesses
reputation, which therefore means less people will buy shares and many will sell,
to get out of there before they potentially lose their money.