A Study of the Impact of Social Media Sentiment on Stock Prices: an Analysis of Twitter Data and Stock Market Performance

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Mugo, Sharon Nyambura
Issue Date
MSc in Financial Technology
Dublin Business School
By examining Twitter data and illuminating sector-specific differences, geographic inequalities, and engagement indicators, this study intends to examine the effect of social media sentiment on stock prices. The analysis finds a nuanced relationship, with sentiment showing a weak negative correlation with engagement metrics while a robust positive connection exists between likes and retweets. Geographical analysis reveals varied sentiment-stock price correlations, with North America and Oceania showing the strongest positive associations. Sector-wise, the Financial and Technology sectors exhibit moderate to positive correlations while Healthcare has a weakly negative correlation with social media sentiment. The predictive model used in this research highlights challenges in using social media sentiment alone for stock price forecasting. In conclusion, this research enhances understanding of the intricate interplay between social media sentiment and stock market dynamics, providing insights for informed decision-making amidst the complexities of digital discourse and market behavior.