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StockTwits Adds Recommendation App to its Portfolio

Netflix tells you what movies and television shows you might like.

Music-streaming service Spotify provides listeners with suggestions for what to try next.

Locally based fintech startup SparkFin does the same – for stocks.

“You just tap a button and, boom, it feeds you ideas,” CEO Jason Pang said.

StockTwits, a San Diego-based Twitter-like social platform for investors and traders, announced Jan. 20 it had acquired SparkFin, which developed a mobile app to help new investors. Terms of the deal weren’t disclosed.

Howard Lindzon, the co-founder of StockTwits, came up with the idea for the SparkFin app, said Pang; Lindzon’s early-stage seed investment fund Social Leverage was an early investor.

Lindzon’s trading strategy centers around stocks’ 52-week highs and lows, but he could find no simple resource for tracking those milestones, Pang said.

Enter SparkFin. The app shows users lists of stocks, such as “10 Stocks to Watch This Week,” pulled from the previous week’s headlines.

But while Lindzon may have been the impetus for the company’s launch, investors with his level of experience were not SparkFin’s target demographic.

Its aim was to reach young, inexperienced traders and give them a way to become familiar with stocks in which they could invest.

SparkFin launched in 2015.

“As soon as we started doing our content marketing, which started driving web traffic, that’s when we said, ‘We’re onto something,’ ” Pang said.

Phillip Moorman, SparkFin’s head of marketing and growth, published articles on SparkFin’s blog about investing, including success stories of people who had become wealthy through trading.

Web traffic rose from fewer than 1,000 people – the website previously had simply directed visitors to download the mobile app – to more than 30,000 unique views per month, Pang said.

They ended up with users in the finance world in addition to people new to the markets.

“They said it was just easy to look at a list,” Pang said. “I figured it would be too simple for them, but it was just the convenience of checking on, say, the biggest ‘gainers’ of the day, stocks up at least 5 percent.”

Pang said his company’s acquisition by StockTwits became more than a passing consideration by the two companies when Ian Rosen took over the social platform as CEO in July.

The company makes money through the advertisements it hosts on the site. More eyeballs equal more revenue. StockTwits also earns revenue by selling data and hosting events.

StockTwits’ platform averages 140,000 messages per day – 230 per minute during the trading day – and its active users spend an average of 51 minutes on the site daily. Still, a first-time visitor could be forgiven for finding no easy way to jump into the complex streams of conversation and data.

“Our community is very, very engaged, but it’s not necessarily the easiest thing to get involved with,” Rosen said.

He wants to change that.

To that aim, StockTwits recently launched Money Badger, a blog for new and casual investors, and has expanded its roster of events, announcing an East Coast version of its annual Stocktoberfest event in Coronado as well as several smaller-format get-togethers in New York City for 2017.

StockTwits had 1.5 million unique views this year, a 40 percent increase over the previous year, Rosen said.

However, “most are not going to become core members or go through the streams; they just wanted to see a price or something,” Rosen said. “There’s nothing for them to do if they just want to learn a little more.”

He views SparkFin, which is slated to be integrated into the StockTwits platform, as an on-ramp to that community.

“SparkFin is a tool that helps people discover how to take those first steps,” Rosen said.

Although passive investing through so-called robo-advisors by young investors has received a lot of attention in recent years, many are also interested in active investing, he said.

“The robo-advisors have gotten a lot of attention because they’ve created a millennial-friendly experience, but ultimately it’s not clear that’s how they all want to invest,” Rosen said. “It’s just a piece of the pie.”

The SparkFin team will continue to work out of the Little Italy location of coworking space DeskHub; joining them will be StockTwits’ San Diego-based employees.

“StockTwits has been around for a long time; it’s a community of investors,” Pang said. “Leveraging that growth, plus putting in stock discovery, was a perfect fit.”

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