StockTwits Wants to Make Money Without Advertising or Premium Memberships


There comes a time in every start-up’s life when they have to move beyond, “If we build it, they will come,” and start focusing on guap. For StockTwits co-founder and investor Howard Lindzon, that time is nigh. But rather than the typical advertising or premium membership route, Lindzon’s New York- and San Diego-based Twitter-based financial network for traders and investors has opted to disrupt the staid field of corporate investor relations. Betabeat talked to StockTwits investor and executive editor Phil Pearlman today to find out why.

Mr. Pearlman said it wasn’t a hard choice to go after investor relations departments who want to use the StockTwits platform to disseminate company information. Because it’s easier to get corporations to pony up for the service than investors that have a wealth of other ways to find out about potential investments? “That’s a great point,” said Mr. Pearlman.

It was also a natural fit. “It was very organic. We found companies coming onto our platform and sharing information. Our network is really the place where traders and investors convene to share information in real time. I’m biased. But I think it’s a very smart move to do.” For public companies like Dell, Hewlett Packard, and NetApp, who are beta testing the service (free, with $99/month for compliance costs), it’s a way to “even the playing field” by getting the word out about earnings, new developments, or new partnerships.

Betabeat took that to mean evening the field with positive information—a leveling force against whatever is being said against them online. In effect that makes StockTwits more of a promotional tool than just investor relations for existing shareholders with a social media twist.

Mr. Pearlman said he didn’t have exact metrics on how many StockTwits users would see this corporate-sponsored information a day. But he did note, “We’re growing like crazy, thousands and thousands of messages come through our site everyday.” The S&P futures section of the dashboard, he volunteered, had multiple messages a minute. “And that’s just one asset.” Private companies can also join in the social media fun. “The conversation related to Groupon and Pandora is also heavy.”

With all the new hedge funds looking to Twitter sentiment instead of actual human analysts, won’t this skew the system? “We didn’t invent it,” said Mr. Pearlman, “We just made it incredibly easy for people to access information more quickly. We’re very much in the spirit of that—they call it the information age or whatever. I’m not into slogans, but information is moving much more quickly now.”