S-Score

AAA

DEFINITION of 'S-Score'

A numerical value that encapsulates how consumers and investors feel about a company, stock, ETF, sector or index as expressed over social media, specifically Twitter. S-Scores are created with data gathered by social media monitoring engines to help investors make trades and to help companies with market analysis and decision making.

BREAKING DOWN 'S-Score'

In 2013, NYSE Technologies and Social Market Analytics created the first S-Score to be distributed over a high-performance global network, specifically geared toward the financial sector and designed to benefit trading firms, portfolio managers, hedge funds, risk managers and brokers. Along with its trademarked S-Score, SMA offers S-Mean, S-Delta, S-Volatility, S-Buzz and S-Dispersion indicators (together called S-Factors), to track the volume, change and dispersion of social media comments. Their system filters out irrelevant and duplicate comments and spam to focus on the 10% of comments that provide meaningful information.

An S-Score of greater than +2 is associated with significant positive sentiment, while an S-Score of lower than -2 is associated with significant negative sentiment. A score greater than +3 is considered extremely positive, while one below -3 is considered extremely negative. Anything between -1 and +1 is considered neutral. Higher scores could be also associated with higher Sharpe ratios, while lower scores could be associated with lower Sharpe ratios.

Investors can use S-Scores to help them pick stocks. When S-Score changes, stock price is expected to change as well. Research by Social Market Analytics has shown that stocks with S-Scores higher than +2 significantly outperformed the S&P 500 over the period December 2011 through December 2013, while those with S scores less than -2 underperformed it significantly. As of January 2014, SMA computed S-Scores for all U.S. stocks with a meaningful amount of social media data. Examples include Whole Foods, Tesla Motors, Apple and Luluemon.

RELATED TERMS
  1. Social Media

    Internet-based software and interfaces that allow individuals ...
  2. Social Networking Service (SNS)

    SNS stands for “social networking sites.” SNS users create a ...
  3. Millennial

    A name given to the generation born between 1982 and 2004. The ...
  4. Social Sentiment Indicator

    A measurement based on aggregated social media data that helps ...
  5. Social Networking

    The use of internet-based social media programs to make connections ...
Related Articles
  1. Professionals

    How Financial Advisors Are Leveraging Social Media

    As financial advisory clients are increasingly turning to social media, wealth managers who aren't following suit risk being left behind.
  2. Entrepreneurship

    Implementing A Small Business Social Media Strategy

    As social media continues to change the way people communicate, it has become an increasingly important tool for small businesses.
  3. Personal Finance

    Buying Followers On Social Media Sites

    "Follower sellers" create numerous fake accounts and program them to like or follow a certain page for a price.
  4. Personal Finance

    Social Media Advertising Done Wrong

    Here are some of the more notable social media disasters involving large companies.
  5. Personal Finance

    3 Social Media Companies Ready To Go Public

    These sites are expected to go for outrageous prices, but are they worth the hype?
  6. Personal Finance

    5 Emerging Social Media Companies You Need To Know

    If you aren't already using these services, you might want to check them out.
  7. Investing

    Why Investors Can't Get Enough Of Social Media IPOs

    From earnings potential to fear, we look at five reasons why investors are so enthusiastic about investing in social media.
  8. Investing

    What’s Plaguing Twitter and Yelp?

    Yelp and Twitter have recently become grounded in reality and unable to justify their sky-high stock valuations.
  9. Investing

    Three Companies That Will Benefit From Online Gaming

    Certain companies stand to benefit from the increasing popularity of the online gambling industry in the U.S., as well as its expanding legalization.
  10. Professionals

    10 Must-Follow Broker-Dealers on Social Media

    Stay in the financial markets 'know' by following these influential independent broker-dealers on social media.
RELATED FAQS
  1. Who are Facebook's (FB) main competitors?

    Among the hundreds of online social media sites on the Internet, sites that compete directly with Facebook (FB) include Instagram, ... Read Full Answer >>
  2. Who are Google's (GOOG) main competitors?

    Google is a technology company providing products and services to organize information. Google, Inc. (GOOG) was founded in ... Read Full Answer >>
  3. How does Facebook (FB) make money?

    Facebook Inc. (FB) reported third quarter 2014 financial results on October 28, 2014. The company reported total revenues ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Stock Market Crash

    A rapid and often unanticipated drop in stock prices. A stock market crash can be the result of major catastrophic events, ...
  2. Financial Crisis

    A situation in which the value of financial institutions or assets drops rapidly. A financial crisis is often associated ...
  3. Election Period

    The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether ...
  4. Shanghai Stock Exchange

    The largest stock exchange in mainland China, the Shanghai Stock Exchange is a nonprofit organization run by the China Securities ...
  5. Dead Cat Bounce

    A temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend. A dead cat bounce ...
  6. Bear Market

    A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!