In the late ’90s, investors trolled for tips and surprise hot stocks on the message boards of financial sites such as Motley Fool or TheStreet.com. But stock talk is now moving into a new arena – social networking.
Stockr Inc. in Santa Monica is one example of a new wave of social media sites designed for investors. The site debuted last month and its nearly 2,000 members go there to follow stocks, get aggregated business news from around the web and share insights about companies with the Stockr community.
It’s the last element that co-founder Vinny Jindal thinks is the real evolution from the message boards of yore – not just opinions, but real-world information about companies and their products. The ideal conversation he’d like to see on Stockr?
“A doctor that prescribes a certain medication and sees that many of his patients are unhappy with the results would have some good perspective on the pharmaceutical company that makes that drug,” Jindal said.
Stockr members can build portfolios on the site, and then they’ll see stock charts and posts related to the companies they’re following. If someone makes a comment on one of the companies, other people could respond and a discussion could follow down a thread.
The site also determines a member’s interests based on his portfolio and recommends other high-performing stocks in related industries.
Jindal wants Stockr to create a community of trusted members, unlike sites such as Yahoo Finance or Motley Fool, where a reader doesn’t know who’s behind the comments. It’s important to get input from trusted sources on stock picks, he said.
One among many
Stockr is among a number of companies that run social networks for investors. Stocktwits Inc. in Coronado was founded in 2008. People use the site to share short bursts of information Twitter-style about companies. New York’s SumZero Inc. has three sections: one for high-level investors such as hedge fund managers, another for professionals at investment firms and a third for casual investors. That site is partially funded by Tyler and Cameron Winklevoss – the twins who made their fortune settling a battle with Mark Zuckerberg over the founding of Facebook Inc.
Howard Lindzon of Stocktwits said his site has 500,000 members; SumZero reports it has 7,500 high-end investors and thousands more in the other groups.
Yahoo Finance hasn’t gone out of style: It still gets 37 million unique viewers a month and loads of comments. But Jindal said social networks can better separate a signal from all of the noise.
A Stockr member must sign into the site using a Facebook ac-
count, which means his name is attached to all his discussions, rather than an anonymous username. Facebook claims more than 90 percent of its members are using legitimate names. As a result, Jindal said conversations on his site are trustworthy and relevant.
“You can actually have a conversation rather than a shouting match,” he said. “I act like a different person when I’m anonymous. This removes that obstacle.”
But John McLaughlin, a day trader in Orange County who runs the investor information site DayTradersWin.com, said he doesn’t think the Facebook registration will necessarily increase the reliability of comments.
“Investors don’t want a site with noise, they want information and experts,” McLaughlin said. “I’d worry that discussion on these sites have too many opinions and not enough facts.”
Jindal began Stockr in 2010 after a decade spent covering biotechnology companies for large brokerage firms, including New York’s Lehman Bros. Holdings Inc. and Wedbush Securities Inc. in Los Angeles. The idea for a social networking site for investors came from one of his neighbors, Tim Symington.
Jindal, Symington and another co-founder, Brendon Crawford, funded the first few years of the company themselves before turning to outside investors. Stockr recently announced it raised $1.5 million from an initial round of venture capital funding, which Jindal said he’ll use to expand the company beyond its 10 employees. He plans to keep the company in its current office – a small, second-story loft in a wood-frame building two blocks from the beach.
The company also has several high-profile members on its advisory board, including former executives at Facebook and Thompson Reuters Corp.
Jindal plans to adopt the “freemium” model for Stockr, with access to the site at no charge but a subscription for extra features, such as exclusive insight into companies. The site will also incorporate advertising.
Typically, exclusive analysis and inside scoops about companies are only available to investors that have access to professional financial wire services such as Bloomberg LP. Those services can cost nearly $24,000 a year – far more than a casual investor is likely to shell out.
Stocktwit’s Lindzon and Jindal see their networks as a step toward leveling the playing field for investors who want access to top information.
“Our goal is to be the connective tissue that binds together companies, experts and providers of information,” Jindal said. “We just want to give people the space to discuss investing cleanly and transparently.”
