Transforming one web page into $1 bn of market-moving insights
We all know the web contains valuable information, but the untapped potential of information that is out there, but not structured or used correctly, is enormous.
Any doubts about that statement were put to rest recently when a web-data firm, Selerity, uncovered Twitter’s Q1 earnings results about an hour before the scheduled release. Twitter’s stock promptly fell 5 percent, losing roughly $1.6 billion of market capitalization. The stock continued to tumble throughout the day, as the earning results were lower than expected, and investors who knew and acted on the information first profited enormously.
A day later, a similar story unfolded with Salesforce.com. When news reports surfaced that Salesforce.com had hired bankers to help review bids from potential acquirers, Salesforce shares jumped 11 percent, adding more than $5.3 billion to Salesforce’s total market value.
The stocks in these stories moved in different directions, but the takeaway is the same — early insights into company health and financial data can be enormously valuable.
Traders, portfolio managers, analysts and others in the the finance industry spend huge sums each year for access to potentially market-moving data. A Bloomberg terminal, considered to be the industry’s gold standard for news and financial information, costs more than $20,000 a year.
Finance professionals can justify such expenses because the sums they trade are so large. But individual investors or developers working on a custom trading algorithm typically lack those resources.
Now, a new class of tools is emerging to help level the information playing field, by transforming dispersed and nebulous information into structured data and powerful insights.
Kimono is one of these tools that lets anyone — from retail investors to seasoned financial professionals — gather and process information from anywhere on the web. Kimono’s ability to structure information allows anyone to capitalize on the potential value offered by internet data.
In the Twitter example, Twitter’s investor relations website posted the company’s earnings announcements to a URL that followed the same pattern as all other announcements. The firm was counting on the fact that nobody was looking at that URL, but with the ability to easily monitor URLs of interest, a web crawler like kimono can easily detect that change in base data.
While laws and regulations are in place to prevent insider knowledge from swaying the markets, there is nothing that prevents using public information smarter and faster than your competitors.