Thanks to the development and our reliance on the internet, the investing world has watched its landscape transform over the last decade. Now, we are able to get real-time data with a click, making trading an even more heads-up affair. It is also easier than ever to complete comprehensive research on various securities, as many start their search with none other than Google to learn more about a particular company. In some cases, the trends in "Google searches":http://freedenislevkin.ru/dow-jones-stocks-questions-answered have been a big tell for the performance of certain stocks.
We took a step back and examined the search popularity of three stocks versus their performance. Each chart below shows the percent change in search volume vs. stock price over the last 10 years, with some fascinating results.
Krispy Kreme (KKD)
Krispy Kreme, a popular breakfast fast food chain, seems to walk hand-in-hand with its Google popularity. Though the company does see search spikes every few months, those can likely be attributed to marketing or news. Overall, the trend of searches for the company starts on a downward hill in 2004, only to pick up around 2010. Coincidentally, the stock moved almost in tandem with the search traffic.
In some cases, the stock performance likely informed the search volume, but we note that search volume for the company makes a sharp increase in mid-2012, several months ahead of the stock doing the same. While no concrete conclusions can be drawn from the example, it certainly seems like the search volume for this company signaled a trend in its stock movement [see also Best Trend Trading Setups With Examples].
Save a massive search increase in 2005, Blockbuster has been watching its popularity on the internet take a dive. Likewise, Blockbuster’s stock, formerly trading under the ticker BB (now under BLIAQ), utterly collapsed, as it is now worth mere pennies per share.
In this case, the declining search volume is likely due to increasing technology elsewhere, as streaming videos and cloud services began to edge out Blockbuster. This too made a big impact on the stock, as the company eventually filed for bankruptcy and is left as merely a skeleton of what it once was [see also Don’t Fret, Salvage Your Losing Position With Options].
JC Penney (JCP)
JC Penney and its search volume seemed immune to each other for a few years, as it was not until approximately 2009 when the two began to move in lock-step. Investors will note spikes in search volume in every December, as JC Penney is a much more popular search term around the holiday shopping season.
Once 2009 rolled around, it seems that the stock performance and search volume shared the same dips and jumps, with the overall trend pointing to a company that is losing popularity among consumers and losing steam in the investing world.
The Bottom Line
There certainly isn’t enough evidence to definitely state that the search volume of a company is indicative of its stock performance, but there certainly seems to be some occasions where trends emerge. Looking at search volume is not likely to be a major asset when it comes time to do your research, but it may be an unconventional method that is worth granting weight. A company’s popularity (or lack thereof) with consumers can go a long way as far as future stock movement is concerned.
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