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Social media got some professional validation this week, when the SEC announced that official investor news could be released under certain circumstances. That led to Twitter's inclusion in high-end trading software and has resulted in a changed and updated interface for traders. The news also validated the actions of at least on CEO and may have laid the groundwork for a change in the way investors gather information.
This week, Bloomberg announced that it will add a Twitter feed to its products, allowing traders to follow the tweets of CEOs, CFOs, and investors. The move is a reversal, of course, as most messaging platforms have been purged from trading floors because of the worry that information would not just come in, but go out as well. The SEC recently decided that social media can be used to tell investors important company news, so long as it's consistent with a published social-media plan.
Companies may also post important information on Facebook (NASDAQ: FB ) , so long as they tell investors which Facebook pages it will appear on. That allows all investors to have access to the same information at the same time and stops companies from violating the regulations regarding fair disclosure.
This is good news for Facebook, which is still fighting to pull its stock back to the IPO price. It's also a good sign of the company's use across platforms. While Bloomberg hasn't announced a tie-in with its terminals, the ability to find investing news on the social site should generate interest from outside developers and could lead to at least a minor income stream. The news came in the same week that Facebook announced its new product for Android devices called Home.
Impetus for the change
The whole reason we're here considering social-media outlets is that late last year, Netflix (NASDAQ: NFLX ) CEO Reed Hastings posted information about Netflix's streaming-content volume on his Facebook page. At that point, Netflix was looking for any good news it could get its hands on. The company was coming off a slower quarter, with subscriber numbers growing by just 1 million. But momentum was on the company's side, and in the fourth quarter last year it brought in 2 million subscribers.
The SEC was interested in the good news and reprimanded Reed for his indiscretion. At first, it seemed he would also be fined. The incident highlighted the changing nature of business-investor communications, and the rules were re-evaluated in light of the new technology.
It was also a recognition of what's already been happening online. Sites such as StockTwits have been collating data from Twitter for some time now. The site tracks message volume and sentiment to help investors understand what's happening in the marketplace. The new Bloomberg integration will replicate a bit of that approach, with the goal of helping traders crowdsource stock information.
The bottom line
The real lesson for investors is that we can't ignore social media. You may hate Facebook, but perhaps you should open an account just to see what CEOs are saying. The new face of investor relations is much like the new face of customer relations -- social media-heavy and more personal.
After the world's most-hyped IPO turned out to be a dud, most investors probably don't even want to think about shares of Facebook. But there are things every investor needs to know about this company. We've outlined them in our newest premium research report. There's a lot more to Facebook than meets the eye, so read up on whether there is anything to "like" about it today, and we'll tell you whether we think Facebook deserves a place in your portfolio. Access your report by clicking here.