In this series of posts, I will try to quantify IF, and how much, this bubble is really inflating. We will use three measures taken with data over the last two years:
1. A side-by-side comparison of the stocks performance vs. the NASDAQ
2. The difference in percent change the stock price and the NASDAQ
3. A momentum measure defined as:
Momentum = daily relative change in stock price* daily relative volume,
then taken as a 50 day moving average.
Any momentum > 0 suggest higher prices on higher volumes and any momentum < 0 suggests lower prices on higher volumes.
These three measures will give us a good idea of how quickly these stock prices are inflating in comparison to others, as well as the overall buying/selling sentiment in the stock. I encourage readers to suggest additional measures if they have any good ideas.
We begin with three of the biggest players in the field; Apple, Google, and Sina Corp.
Apple (aapl) is an interesting case because it is not directly involved social media. Instead they build the hardware (ipads, iphones, itouches, itunes) that social media would be much smaller without. Nonetheless, the two are intricately related, and Apple is undoubtedly at the forefront of this field.