The buzz behind the stock market : Analysis and characterization of the social media activity around the time of big stock valuation changes

Sammanfattning: As the discussion of stocks on social media is increasing its effect on the financial market is distinct. This has led to new opportunities in influencing private investors to make uninformed decisions affecting the value of stocks. This thesis aims to enable readers to distinguish patterns in social media discussion regarding stocks and thus provide an understanding of the effect it has on public opinion. By identifying significant events of big stock valuation changes and collecting corresponding stock-related data from the social media platforms Reddit and Twitter, analysis in the fields of frequency of posts and Sentiment analysis was performed. The results display trends of an increase in discussion on social media leading up to the occurrence of significant events and an overall increment of interest online for specific stocks after significant events have occurred. Furthermore, the overall sentiment in the discussion for both increasing and decreasing events is positive in almost every case, with the exception that the sentiment score of increasing events is higher than its counterpart. The day-to-day sentiment score during events indicates a much higher fluctuation in sentiment for Reddit compared to Twitter. However, a significant increase in score the day before an event occurs is prevalent for both. These findings imply the possibility to predict stock valuation changes using data gathered from social media platforms.