"Your Smartphone’s Location Data Is Worth Big Money to Wall Street "
From the Wall Street Journal:
When Tesla Inc. Chief Executive Elon Musk said the car maker would
work around the clock to boost production of its Model 3 sedan, the
number crunchers at Thasos Group decided to watch.
They circled Tesla’s 370 acres in Fremont, Calif., on an online map,
creating a digital corral to isolate smartphone location signals that
emanated from within it. Thasos, which leases databases of trillions of
geographic coordinates collected by smartphone apps, set its computers
to find the pings created at Tesla’s factory, then shared the data with
its hedge-fund clients, showing the overnight shift swelled 30% from
June to October.
Last week, many on Wall Street were surprised when Tesla disclosed a rare quarterly profit, the result of Model 3 production that had nearly doubled in three months. Shares shot up 9.1% the next day.
Thasos is at the vanguard of companies trying to help traders get
ahead of stock moves like that using so-called alternative data. Such
suppliers might examine mine slag heaps from outer space, analyze
credit-card spending data or sort through construction permits. Thasos’s
specialty is spewing out of your smartphone.
“It’s
creating this data all the time, even if it’s not ringing,” said Greg
Skibiski, Thasos’s 45-year-old founder and chief executive. “It’s a
beacon. Every single person is carrying this beacon.”
Thasos gets data from about 1,000 apps, many of which need to know a
phone’s location to be effective, like those providing weather
forecasts, driving directions or the whereabouts of the nearest ATM.
Smartphone users, wittingly or not, share their location when they use
such apps.
Before Thasos gets the data, suppliers scrub it of personally
identifiable information, Mr. Skibiski said. It is just time-stamped
strings of longitude and latitude. But with more than 100 million phones
providing such coordinates, Thasos says it can paint detailed pictures
of the ebb and flow of people, and thus their money.
Alex “Sandy” Pentland, a Massachusetts Institute of Technology
computer scientist who helped launch Thasos, likens it to a circulatory
system: “You can look at this blood flow of people moving around.”
Alternative data’s utility to investors is the subject of debate.
Critiques range from the argument that samples can be riddled with
biases and errors, to the idea that most data is fairly useless for
predicting stock prices....MUCH MORE
