Traffic Signals

With e-commerce projected to account for 40% of global retail sales by 2027, a new study from UC Berkeley Haas and Stanford GSB uncovered something Wall Street has been missing: Website traffic can forecast revenue and stock prices months before earnings announcements—and more accurately than traditional metrics alone.

The effect is driven by companies like Amazon, Netflix, or Tesla whose websites sell things or deliver digital products, according to The Accounting Review study. 

“We found that stock prices do not fully incorporate digital traffic information—Wall Street is leaving money on the table,” says Associate Professor Yaniv Konchitchki, who co-authored the study with Assistant Professor Biwen Zhang and a Stanford colleague. 

The study, based on digital traffic data from over 1,000 of America’s largest companies, representing roughly 90% of the U.S. stock market’s capitalization, found websites are both a real-time and a forward-looking gauge of financial health. Companies with surging web visits consistently beat revenue estimates—and investors who traded on traffic trends earned substantial above-market returns. 

The mispricing was particularly pronounced among companies owned mostly by individual investors rather than giants like mutual funds and hedge funds—and even they aren’t fully exploiting it.