Yesterday's adoption of the dollar-sign ticker symbols as company identifiers by Twitter (the "cashtag") could be interpreted several ways.
Some viewed it as a business threat to StockTwits, from whom Twitter "hijacked" the approach. But I view it more as validation of StockTwits, as the clear leader in social finance.
For those not familiar with the $ ticker designations, StockTwits, realizing it needed a simple way to tag tweets to companies devised a simple approach. By placing a $ in front of a ticker symbol, the tweet's author would be tagging it to that company. In essence, while "man" may refer to a person, $man would indicate a comment about the company Manpower. The $ is the clue used to disambiguate true tickers from simple words.
That was four years ago, and the $ticker approach has become ingrained for many of us. In fact, I find it a useful short-form alias for a company, often using it in email and other communications outside Twitter.
Unique identifiers have always been a critical part of the financial information business. Proprietary identifiers like CUSIP numbers, used for trade settlement, have generated huge license fees for Standard & Poor's (and the enmity of many of those paying the fees). Meanwhile, companies like Alacra have developed a strong Concordance business, simply matching both proprietary and public keys to their underlying companies.
While Twitter, StockTwits, Facebook and others are clearly not being used to conduct financial transactions, their success as a market data platform depends upon their ability to filter and group content around a company.
As such, Twitter's adoption of the StockTwits form reinforces StockTwits position as the leading real-time financial communications company. Unlike S&P, who wield ownership of identifiers as a source of licensing income, StockTwits is well-served allowing others to adopt its format. In fact, providing an API so others can do ticker lookups by company names (and supporting various name variations, e.g. Research in Motion, RIM, RIMM, etc) would further entrench them as the source for online company identifiers.
So, does this threaten StockTwits' core business? Not at all. StockTwits founder Howard Lindzon notes that while "Twitter is about advertising dollars... Stocktwits provides context, curation and community."
That difference is critical. It's the reason why, if you want analysis of a company, you don't start with a Google search. Twitter is a powerful communications platform. But that's because I follow a carefully curated list of people whose insights I value. And it's why their trending topics, while interesting at the macro level, rarely provides any compelling insights when you click into the underlying tweets.
For the novice user, the easiest way to see the value of StockTwits is to monitor a company page during its earnings announcement. It's amazing to watch hundreds of users dissect a 10Q from Apple or Yahoo in real-time, posting their comments to the StockTwits stream. One person may dive directly into footnotes, another to the balance sheet, while the third identifies issues not being presented. There's no comparable experience in the analog world. And that experience would be less valuable, not more valuable, if there were a million random users sharing comments at the same time.
Stocktwits succeeds because of self-selection (only those with an interest in finance participate), curation and professional moderation. You don't need to expose someone's email address to be banned from StockTwits. Just demonstrate that you're not acting in accord with the rules of the community and you will be bounced.
So while Twitter cashtags may lead to some short-term confusion among casual users, the establishment of the StockTwits syntax as the de facto standard is a big win in the long run.
