Topsy: Instant social insight

Twitter Users’ Response to the Facebook IPO

May 24, 2012

With all of the frenzy over Friday’s mega-IPO of Facebook, many would have expected the majority of the fanfare to have died down a bit by now. But as it turns out, only now, is the real news breaking concerning Facebook’s IPO. As reported by many news outlets, there’s speculation that Morgan Stanley didn’t properly notify all investors, as is required by the SEC, when they decided to cut their estimates. As a result, many were shocked and upset when over the course of Friday’s, Monday’s and Tuesday’s trading, Facebook’s stock price plummeted. As the SEC launches an investigation into exactly what happened leading up to the opening bell on Friday morning, Topsy Labs looked into the public’s response on Twitter to the negative news about the IPO. How has the public responded to the recent news about Facebook’s poorly managed IPO?

Aggregating sentiment scores for variety of terms closely related to the event, such as Facebook IPO, Facebook, Mark Zuckerberg, their underwriters, such as Morgan Stanley, Barclays, and Goldman Sachs, we can observe on the graph above how sentiment has followed the path of the stock price and dipped dramatically. With 0 indicating neutral sentiment, we see that on Monday sentiment went back up as expectations remained high during the second day of trading. But as the price continued to drop and as more news broke about the slew of mishaps that surrounded the IPO on May 18th, sentiment quickly turned negative. Below is a graph that looks at sentiment in detail, hour by hour over the course of the past two days:

Focusing on the past 36 hours, we can identify the announcements and events that are driving the significant dips in sentiment. Notice that the two lowest sentiment scores corresponded to time when the news about Morgan Stanley’s being subpoenaed, and when Facebook shareholders filed their law suit. Clearly, there are many factors that impacting sentiment, but how is sentiment impacting the stock price? As reported by Yahoo! Finance, the stock price is down 20.5% since Friday’s open, and closed today at $32 (at time of writing).

Posted by jenna