A study has found that there could be a connection between Reddit posts and the performance of Tesla shares.
Eager to see how much online chatter about the electric automaker impacts its share price, Barclays conducted an analysis of the Wall Street Bets subreddit, focusing on posts that reference either $TSLA or TSLA.
The strategists found that there is a statistically significant relationship between the number of returns on Tesla shares and the number of Reddit posts made one and two days earlier about the company. In addition, Tesla’s share price grew in the days leading up to 20 spikes in Reddit posts made about the carmaker over the past five years, Business Insider reports.
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“We have painfully learned that social media memes can matter more for TSLA share performance than actual financial metrics, fundamentals or (dare we say) valuation,” Barclays analysts led by Ryan Preclaw and Brian Johnson said in a research note. “In the model we think is most appropriate, a swing up of 7 or more submissions today over yesterday has been predictive of outsized returns in TSLA stock tomorrow.”
Despite the findings, the study notes that there isn’t yet enough data to establish a rock-solid link between Tesla’s share price and Reddit posts.
“The situation has been so dynamic that there are simply too few examples to be confident of a stable process between WSB posts and TSLA returns,” the analysts wrote. “Even more than usual, past results might not predict future performance.”
