On the Capital Market Consequences of Alternative Data: Evidence from Outer Space * ZSOLT KATONA * zskatona@berkeley.edu MARCUS O. PAINTER ** marc.painter@slu.edu PANOS N. PATATOUKAS * panos@haas.berkeley.edu JIEYIN ZENG * jieyin_zeng@haas.berkeley.edu Abstract We study the emergence of satellite imagery of parking lot traffic across major U.S. retailers as a source of alternative data in capital markets. We find that while measures of parking lot traffic from outer space embed timely value-relevant information, stock prices do not incorporate this information prior to the public disclosure of retailer performance for the quarter. This creates opportunities for sophisticated investors, who can afford to incur the costs of acquiring and processing satellite imagery data, to formulate profitable trading strategies at the expense of individual investors, who tend to be on the other side of the trade. Our evidence suggests that unequal access to alternative data increases information asymmetry among market participants without necessarily facilitating stock price discovery. Keywords: Alternative Data; Satellite Imagery; Price Discovery; Information Asymmetry. JEL Classification: G12, G14, G23. Affiliations: * Berkeley Haas; ** Saint Louis University. Acknowledgments: We thank RS Metrics and Orbital Insight for providing the satellite imagery data of parking lot traffic, and Markit for providing the securities lending market data. For helpful comments and discussions we thank Chris Clifford, Jill Fisch, Kristine Hankins, Russell Jame, Tom Lee, Frank Partnoy, Tamara Nefedova (discussant), the PhD students at Berkeley Haas, U.S. SEC Commissioner Robert Jackson and the DERA Staff. We also thank seminar participants at the 9 th Miami Behavioral Finance Conference, the University of Kentucky, and the 2019 Future of Financial Information Conference at the Stockholm Business School. We gratefully acknowledge financial support from the Fisher Center for Business Analytics at Berkeley Haas. This paper is the product of merging two related papers, one of which had the current title and another that was titled “Un- levelling the playing field: the investment value and capital market consequences of alternative data.”