How much is Twitter worth to high-frequency traders?
Kara Swisher says that Twitter might start selling access to its “firehose” — the full stream of all public tweets from its tens of millions of users — to Google and Microsoft. Such companies, she says, might be willing to pay “several million dollars” for such a product.
Which raises the obvious question: if the Twitter firehose is worth millions to a search engine, how much would it be worth to algo traders and data miners? And how much of a premium would they be willing to pay to get that information a few milliseconds before anybody else? Indeed, would they be willing to pay Twitter a huge amount of money just for the privilege of hosting its servers in a the same location as their own proprietary stock-trading black boxes?
There’s been a lot of speculation of late about how on earth Twitter could be worth $1 billion. Maybe this is it! After all, the stock market, like Twitter, is basically a reflection of real-time sentiment. If you could somehow mine Twitter to isolate changes in sentiment, that could be worth billions.