Satellite, Foot Traffic and Geolocation Data
Satellite imagery tracks economic activity from space, from retail parking lots to oil storage and crops. Learn how investors use it, the research and the limits.
Satellites now photograph almost every part of the Earth daily. Combined with computer vision, these images can count cars in retail parking lots, measure oil in storage tanks, track construction, estimate crop health and monitor factory activity. Investors use satellite data to estimate company results and commodity supplies before official numbers are released. It became one of the best known examples of alternative data, though its practical edge has narrowed as the data became more widely available.
What satellites can measure#
| Application | How | Investment use |
|---|---|---|
| Retail parking lots | Counting cars over time | Estimate store traffic and sales |
| Oil storage tanks | Shadows on floating roof tanks show fill levels | Estimate crude inventories. See Storage and Inventories |
| Crops | Vegetation indices from multispectral images | Estimate yields. See Weather and Agricultural Data |
| Mining and industry | Stockpiles, activity at mines and smelters | Commodity supply |
| Shipping and ports | Vessels and containers | Trade flows. See Shipping and Supply Chain Data |
| Construction | New buildings and infrastructure | Economic activity, especially in emerging markets |
| Nighttime lights | Brightness of cities | Proxy for economic activity where statistics are weak |
| Pollution and emissions | Nitrogen dioxide levels | Industrial activity, as tracked in China during 2020 |
Oil tanks: a classic example#
Many crude oil storage tanks have floating roofs that sink as oil is drawn down. The roof casts a shadow inside the tank, and the shadow's size reveals how full the tank is.
Parking lots and retail#
In the early 2010s, firms such as RS Metrics and Orbital Insight sold car counts at major retailers' parking lots. Academic research, including a 2019 study by Katona, Painter, Patatoukas and Zeng, found that parking lot data predicted retailers' earnings surprises and that investors with access to the data could earn excess returns around earnings announcements, while the information was not widely used.
Technology#
- Optical imagery: standard photos; affected by clouds and darkness.
- Synthetic aperture radar (SAR): sees through clouds and at night, useful for tank and ship monitoring.
- Multispectral and hyperspectral: measures plant health and materials.
- Computer vision: machine learning models count objects and detect changes. See Machine Learning in Trading.
Companies such as Planet Labs, Maxar and others operate constellations that image large areas frequently.
Limits and costs#
| Limit | Explanation |
|---|---|
| Weather | Clouds block optical images |
| Coverage gaps | Underground parking, indoor activity and online sales are invisible |
| Cost | High resolution imagery and processing are expensive |
| Interpretation | Converting images into accurate economic estimates is hard |
| Crowding | As more funds buy similar data, edges shrink. See Signal and Alpha Decay |
| Changing business models | Retail parking lots matter less as online shopping grows |
Who uses satellite data#
- Commodity traders for oil, metals and crops.
- Hedge funds for retail, industrial and emerging market insights.
- Economists and governments for activity in regions with poor statistics.
- Insurers and ESG analysts for physical risk and environmental monitoring.
Frequently asked questions#
How is satellite data used in investing?#
To measure activity such as cars in parking lots, oil in storage tanks, crop health and shipping, helping estimate company results and commodity supply.
Can satellite data predict earnings?#
Research has found that parking lot data predicted some retailers' earnings surprises, but the edge has narrowed as the data became widely available.
What are the limits of satellite data?#
Clouds, coverage gaps, high costs, interpretation challenges and crowding as more investors use the same data.
Next, learn about trade flow data in Shipping and Supply Chain Data.
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Mentioned in
- Web Traffic, App Downloads and Search TrendsData and Alternative Data