On Wednesday, October 6th 2021 Netflix stock hit an all time high at $643 per share, off the back of a rally that started in mid august, but really caught some volume around middle September, as can be seen below.
The movement seems to coincide with the release of the new Netflix series, Squid Game.
We have observed movement with the release of Bird Box several years ago, but do not have the data to examine it, though it sparked curiosity about this type of research.
Looking at the Google search trends, we can see that the movement of Netflix stock seems like it coincides with the release of Squid Game for US markets. With a September 15th, 2021 release, we saw mentions based on the google analytics dashboard peak at 100, meaning it is one of the most popular searches in the US.
Needless to say, the show is a huge hit. But is there anything there? Let’s find out.
As always, none of this is financial advice in any way, shape or form, and any suggestions herein referencing a strategy are for the sake of the research, and not financial advice. No items or data contained within should be interpreted as trade signals in any way, shape, or form. As with all research on the market, current and past trends do not predict or reflect future prices, but may be insightful for future movements, so do your research before you make an investment decision.
Can social media influence stock prices?
We already have examples of social media being utilized to move markets en-masse, such as the case in January with Gamestop Corp. (GME), AMC Corp. (AMC), and crypto such as Shiba Inu (COIN: SHIB), but can a release of a product that gains traction with social media affect the stock without directly mentioning the stock?
Creating a two-axis plot allows us to check and see if there is a general trend when the plots are overlain against each other.
A visual analysis shows that there could be some correlation here, but we’d need to check further.
It’s off the wall (or shelf)
Another company which has gained some traction with the release of squid game is Vans, the shoe company we all know and love despite never releasing anything other than different colors of the same shoe. It’s a worldwide cultural staple, and has cemented itself as a timeless classic shoe.
Enter squid game.
Since the release on US soil, Vans (NYSE: VFC) has seen a 7800% rise in sales of their white slip on shoes solely based on the series’ use of them throughout, as referenced in an article from The Independent. In other capacity, regular white shoes have also seen a 97% uptick in search volume.
The Google search trends for Vans ticked up to 100, suggesting peak relevancy as referenced earlier, as can be seen from the chart below, but it doesn’t seem like it’s as decisive as searches for Squid Game.
What does this tell us about the stock price though?
The chart below shows extremely weak correlation to any type of movement from Vans stock based on twitter mentions of squid game, and there isn’t much to the way of mentions on Vans in general on Twitter, or at least enough to check for a correlation.
Unfortunately, there isn’t anything to be said here. In fact, the statistics show that there is a negative correlation between Vans stock price and number of mentions of squid game on twitter, though it’s an insignificant negative (-.45), so nothing to be seen here.
Are you still watching? Back to Netflix
Even though we found nothing regarding Vans stock and twitter mentions, there is something to be said about Netflix stock.
Netflix stock had a correlation (Spearman R) of .635, showing promise regarding movement of the stock with Twitter mentions.
Okay, that’s cool, but what does this mean for me, an investor?
The statistics would suggest that the next time Netflix releases a big series that gets a lot of media traction, buying NFLX stock would most likely yield a positive return. Checking Twitter and Google trends for previous years with mega social media hits such as Bird Box shows positive correlation on the trends, so it looks like there is potential profit to be made with these blockbuster series.
However, it is important to remember that past performance does not dictate future results, so do your research accordingly.
Happy Whale Watching.
DM me on Twitter @falcon_fintwit if you have suggestions for further research, or if you have any questions about methods. I would love to hear them!
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