Donald Trump's Twitter account played a huge part in his campaign for the White House, and now it is also a force to reckon with when it comes to the stock market.
In a tweet sent out in the early morning of Dec. 12, the president elect said Lockheed Martin's F-35 program and cost are "out of control."
"Billions of dollars can and will be saved on military (and other) purchases after January 20th," Trump alluded to his first day in office.
Immediately after this tweet was posted, Lockheed Martin — with its F-35 military jet program — lost $4 billion in market value.
The company was, however, able to recover later in the day, and even managed to finish stronger than its opening.
Boeing's stock also suffered a dive after Trump tweeted how expensive it was to have a new Air Force One built. Boeing's loss was short-lived, and the company, like Lockheed Martin, was able to bounce back right away.
Traders Cash In On Trump's Tweets
While being the subject of Trump's tweets can be a big blow to companies, other traders see this as the perfect opportunity to cash in on the volatility that Trump's tweets bring to Wall Street.
By keeping an eye on Trump's stirrings on Twitter, traders and hedge fund managers will know when the PEOTUS tweets about a business. They will have an idea if a company's stocks will go down or up, depending on the tweet.
Wall Street experts are now trying to come up with a way to plug Trump's tweets directly into their trading algorithms to cash in on Trump's Twitter tirades.
However, using a computer to come up with the trades does have its drawbacks. A computer lacks the ability to understand how natural language works, where things like sarcasm and satire cannot be detected by artificial intelligence.
"NLP (natural language processing) is not in a particularly advanced stage, and the kinds of cryptic things you see on Twitter make even less sense to computer algorithms than ordinary language," Manoj Narang, an expert in high-frequency trading, told Mashable.
Zachary David, a senior analyst at KOR Group, also agrees with the sentiment.
"Automating trades based on algorithmically interpreting the language of tweets is difficult because there is a high cost to getting the direction wrong," said David.
Trump's habit of calling out publicly trading companies on Twitter could benefit buyers and sellers who can predict the direction of where a company's stock is going.
