Data-driven technologies are revolutionizing finance in ways that are both exciting and unexpected. Just consider the fintech startup Prattle. The company uses machine learning and analytics to determine whether earnings calls will have a positive or negative impact on markets.
The technologies analyze word choices, speech patterns, length, and other variables of earnings calls. Then the technologies compare those variables against past speeches. The goal is to spot patterns, trends, and indicators that lie below the surface of the statements.
Exploring Prattle's approach is fascinating because it uncovers market oddities that had previously been intuitive but not obvious. For instance, Prattle's data shows that when CFOs talk more than CEOs the company's stock experiences less short-term volatility.