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Influence or objectivity?

We are all swayed in our decision making – be it in buying a product or service.

Traditionally known as word of mouth from friends and family; and now the fancy term being influencer marketing, from an unknown personality.

But how and where do they affect your behaviour and decision making?

Anyone in the start-up space will tell you that how important the narrative is – especially during a fundraising process. In fancy terms, it’s called story telling wherein founders are trained to sell narratives and not necessarily the product/service.

Not just limited to start-ups, even corporates attract internal and external clientele basis the vision and values they embody and the narrative they put out.

Case in point, Elon Musk’s tweets for a particular bitcoin shot up its value by 20% within an hour! Implication of this is that the short sellers are squeezed, and anyone with knowledge and ability to buy before the tweet can earn.. a lot!! (refer insider trading anyone?)

In a working paper, David Kirsch & Mohsen Chowdhury, have observed some early key correlations between Tesla’s stock price and social media activity around the stock.

The bots were most active on days the stock was under pressure or had a negative market-adjusted return. The bots were less active when the stock had a positive market-adjusted return, or when something good happened.

These are 186 bots, with the capacity to generate content 1000’s if not millions of human users.

May it just be that the bots may be buffering the stock on days the narrative was under pressure?

For a lot of emergent ecosystems, retail investors may not have sufficient knowledge about the industry structure or operating metrics. Here’s where founders or social media influencers come to play, putting out a narrative to make sense of what the firm achieves to do and shape people’s expectations.

The question to ask is, if one were to look at any new age business objectively basis just the financial numbers, would they still invest?


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