Anika Begay
Financial chatter has been a major driver of traffic on social media, but it can be difficult (if not impossible) to separate useful signals from the noise. A company called TipRanks uses artificial intelligence and other analytics to try to make sense of it all. And now, on the back of its growing popularity, it’s been acquired 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 create datasets and other insights based on the vast amounts of market data on the Internet. It is currently used by about 50 million individual monthly active users, some of whom use a limited free plan and some of whom pay $30/month or $50/month for more advanced datasets and other material. Corporate clients meanwhile include Nasdaq, Robinhood, CIBC, Morgan Stanley, TD, Rakuten along with other hedge funds, banks, brokers and exchanges.
Prytek has been a prominent TipRanks investor since 2017 and recently led a $77 million round in the company in 2021.
Ironically, for a company that built its business on helping people make smarter bids on stocks, TipRanks has itself been the subject of a bit of a bidding war.
TechCrunch learned that a popular online destination for financial news and data, perhaps the largest in part because it doesn’t use a paywall, had also approached TipRanks with an acquisition offer for a similar amount. Since Prytek was already a major investor, it was notified of the offer and made its own, a deal that made strategic sense, as the plan is to not only continue to grow its individual user base but also make deeper inroads into more enterprise customers.
“Prytek owns a few other great companies in the financial services space,” TipRanks CEO Uri Gruenbaum said in an interview with TechCrunch. “They’ve been able to open a lot of doors for us. And when I say doors, I mean getting Tier 1 banks to work with us.”
TipRanks’ growth to date has come on the heels of some larger trends in the worlds of finance and technology.
The stock market has always thrived on chatter about what to buy and sell, and which assets do well and which don’t. This has skyrocketed with the advent of social media, where sites like Reddit, Twitter (now X), and others have become hotbeds of hot-button opinions and more. The sea of core analysts at financial firms who write and publish financial reports has swelled with a new wave of armchair analysts. But without any quality control, it has become a risky process to actually know what information might or might not be credible.
This situation sometimes borders on the absurd, when you consider the immense speculation, widespread on social media, revolving around cryptocurrencies (whose usefulness is questionable at best, or downright illegal and terrible at worst) or the infamous GameStop squeeze.
Add to this the rise of apps like Revolut, Robinhood, and eToro. These platforms have exploded and democratized the stock market, making it significantly easier for ordinary people to buy and sell shares of publicly traded companies alongside institutional investors and high net worth individuals, who have traditionally come to the table with a lot of money to put down.
You might say that these apps make it easy to earn money, but they also make it very easy to lose it.
Gruenbaum learned the hard way all of these dynamics, both positive and negative, of the modern business landscape.
It was 2012, and while working at a company called ARX, Gruenbaum had received a $20,000 bonus. He enthusiastically decided to invest the windfall money in the stock market, following what he thought was a good, genuine recommendation he found online.
ARX still exists (it was eventually acquired by Docusign), but that bonus doesn’t: Gruenbaum got burned on what turned out to be a bad tip and lost the money.
Not All was lost, though. The scenario became a source of inspiration for him, leading him to co-found TipRanks with CTO Gilad Gat to make better sense of all the noise.
TipRanks was essentially created to address both the challenge and the opportunity at hand. It uses natural language processing to analyze all the conversations and content creation that are going on, which can include published reports but also social media posts. In this way, it produces a vast amount of aggregated data on different companies, sectors and financial instruments; and it identifies and ranks different analysts, from those working at big banks to “finfluencers.”
Gruenbaum had claimed from the beginning that TipRanks was getting calls from analysts who didn’t want to be monitored, particularly if they had made a bad decision or two.
“We had analysts complaining that they couldn’t get new jobs because of us,” he recalled. Indeed, when doing due diligence on candidates, Google searches would turn up TipRanks’ track records on various candidates. Gruenbaum makes no apologies for this kind of transparency. “Look, if you’re a search firm, if a candidate is good, or average, or underperforming, if that’s going to keep you from getting a job, that’s fine. That’s the way it should be. You shouldn’t be giving advice if you don’t know what you’re talking about,” he said.
He says that now that TipRanks has grown in size and reach, he’s less likely to get those calls. Now, he said, most of the time they get contacted by analysts, it’s to update their profile photos.
The company has built the backbone of its business around the U.S. stock market and English-language chatter and content, but has expanded into Canada and Europe in recent years. Part of its future plans will be to create more material in localized languages. While the institutional and enterprise opportunity is huge, Gruenbaum said the primary focus will remain on more tools and access for individual users, something Prytek is also keen to develop.
“We saw TipRanks’ potential to democratize investment insights nearly a decade ago and knew we wanted to be part of their journey,” Prytek founder Andrey Yashunsky said in a statement. “With our strong financial services division, having a resource that has revolutionized access to investment insights, data and news will shape the future of our ever-expanding value chain.”
