Financial chatter has been a major traffic spinner on social media, but it can be challenging (if not impossible) to separate useful signals from the noise. A company called TipRanks uses AI and other analytics to try to make better sense of all that. And now, on the back of its growing popularity, it is getting snapped up for $200 million by Prytek, a developer of business process products for financial services, human resources and other enterprise verticals.
TipRanks uses natural-language processing and data science techniques to build datasets and other insights based on the vast quantities of market data on the internet. It’s currently used by some 50 million monthly active individual users, some of whom use a limited free plan, and some of whom pay either $30/month or $50/month for more enhanced datasets and other material. Enterprise customers meanwhile include Nasdaq, Robinhood, CIBC, Morgan Stanley, TD, Rakuten alongside other hedge funds, banks, brokers, and exchanges.
Prytek had already been a big investor in TipRanks since 2017, most recently leading a $77 million round in the company in 2021.
Ironically for a company that has built a business on helping people make smarter bids on stocks, TipRanks was the subject of a little bidding war itself.
TechCrunch understands that a popular online destination for financial news and data — possibly the biggest in part because it doesn’t use a paywall — approached TipRanks also with an acquisition offer of a similar amount. As Prytek was already a major investor, it was made aware of the offer and made one of its own, a deal that made strategic sense, since the plan is not only to continue growing its base of individual users, but to make deeper inroads into more enterprise customers.
“Prytek owns a few other big companies that are active and financial services,” said Uri Gruenbaum, TipRanks’ CEO, in an interview with TechCrunch. “They were able to open a lot of doors for us. And when I mean doors, I mean getting tier-one banks to work with us.”
TipRanks’ growth up to now has come on the back of some bigger trends in the worlds of finance and technology.
The stock market has always thrived on the back of chatter about what to buy and sell, and which business is doing better and which is not. That was a situation that went into high gear with the rise of social media, where sites like Reddit, Twitter (now X) and others became hotbeds for hot-takes and lots more. The sea of rank-and-file analysts from financial houses writing and publishing financial reports swelled with a new wave of armchair analysts. But without any quality control, it’s become a risky process to really know what information might be more or less credible.
That situation occasionally spills over into the absurd, when you consider the immense speculation, disseminated on social media, that swirls around cryptocurrency — whose utility is questionable at best, or outright illegal and very bad at worst — or the infamous GameStop Squeeze.
Couple this with the rise of apps like Revolut, Robinhood and eToro. These platforms have blown up and democratised the stock market, making it significantly easier for ordinary people to buy and sell shares in public companies alongside those like institutional investors and high-net-worth individuals, which have traditionally come to the table with significant money to put down.
You might say these apps make it easier to make money, yet arguably they make it all too easy to lose money, too.
All those dynamics — both good and bad — of the modern trading landscape were something that Gruenbaum learned about the hard way.
It was 2012, and while working at a company called ARX, Gruenbaum had received a bonus of $20,000. He excitedly decided he would invest the money — an unexpected windfall — in the stock market, following what he thought was a bonafide good recommendation he came across online.
ARX still lives (it was acquired eventually by Docusign), but that bonus did not: Gruenbaum got burned by what turned out to be a very bad tip and he lost the money.
Not all was lost, though. The scenario became a source of inspiration for him, leading him to co-found TipRanks with chief technology officer Gilad Gat to make better sense of all that noise.
TipRanks essentially was created to address both the challenge and opportunity at hand. It uses natural-language processing to parse all of the conversation and content creation that is taking place, which can include published reports but also posts on social media. Through that, it produces a vast amount of aggregated data on different companies, industries, and financial instruments; and it identifies and ranks different analysts, from those working at the big banks through to “finfluencers.”
Early on, Gruenbaum said that TipRanks would get calls from analysts who didn’t want to get tracked by it — namely if they’d made a bad call or two.
“We had analysts complaining that they couldn’t find new jobs because of us,” he recalled. Indeed, when doing due diligence on candidates, Google searches would turn up records from TipRanks on various candidates. Gruenbaum is unapologetic about that kind of transparency. “Look, if you’re a research company, if a candidate is good, or average or has underperformed, if that’s going to stop you from finding a job, that is good. That’s how it should be. You’re not supposed to give advice if you don’t know what you’re saying,” he said.
He says that now that TipRanks has grown in size and reach, it’s less likely to get those calls. Now, he said, most of the time when they get contacted by analysts, it’s to update their profile pictures.
The company has built the mainstay of its business around the U.S. stock market and English-language chatter and content, but in more recent years it’s also expanded into Canada and Europe. Part of its future plans will be to create more material in localised languages. While the institutional and enterprise opportunity is an immense one, Gruenbaum said the main focus will remain on more tools and access for individual users — something Prytek is also keen to develop.
“We spotted TipRanks’ potential to democratize investment information nearly a decade ago and knew we wanted to be part of their journey,” Andrey Yashunsky, founder of Prytek, said in a statement. “With our strong performing financial services division, having a resource which has revolutionised access to investment insights, data and news will shape the future of our ever-expanding value chain.”
Source : Techcrunch
