The Might of Elon Musk’s Tweets
Twitter is a double-edged sword; while it gives you voice, it also exposes you to a deluge of detractors. However, if you’re Elon Musk, tweeting isn’t just about sharing what you had for breakfast, it can actually move markets. Apparently, the billionaire entrepreneur’s tweets have had a particularly pronounced effect, fuelling a stampede into whatever he fancies at the moment. (Clubhouse anyone?) Known to be a zealous tweeter, Musk, who currently has 46.8 million followers on the platform, has been able to drive up the stock of a company in just a few words. Here is a list of companies that have benefited from the “Musk Effect.”
During the pandemic, e-commerce site Etsy, which sells crafts and vintage items had witnessed a rise in its stock price. This was largely due to the (ongoing) demand for masks, as well as a sudden influx of new sellers who had to shift their businesses online All this helped to propel its third-quarter sales in 2020 to a 128 per cent year-over-year growth. On January 26, when Musk tweeted, “I kinda love Etsy,” after receiving a purchase he made on the marketplace for his dog, Etsy’s share price saw an 18 per cent spike from approximately US$213.38 per share to US$227.40 less than two hours later.
Signal Advance (SIGL)
Last month, Texas-based technology company Signal Advance (SIGL) saw its share price increase by almost 1,500 per cent over a 24-hour period and brought its market cap to US$100 million from US$7 million during that week—all thanks to the South African billionaire who tweeted “Use Signal” on January 7. In actual fact, Musk was referring to the encrypted messaging app (WhatsApp’s rival) Signal that was developed by the non-profit Signal Foundation. However, investors went into a paroxysm of excitement, accidentally snapping up shares of Signal Advance, which drove the price from 70 cents to US$70 in under a week. After the ballyhoo, it has since fallen back down to US$7.
Unless you have been living under a rock, you would have heard about American gaming merchandise retailer GameStop Corp’s valuation skyrocketing to more than US$10 billion. The company’s stock gains were sparked after Musk tweeted “Gamestonk!!”—a portmanteau of GameStop and “stonks” (a slang for stocks)—together with a link to the WallStreetBets Reddit thread. In the same month, the company’s market value rose more than 18 times to approximately US$24 billion, making them bigger than nearly half of the companies in the S&P 500 Index.
The price of cryptocurrency Dogecoin jumped more than 50 per cent on February 4 after Musk posted his support for it. On the same day, Musk first tweeted “Doge” and later followed up with a second tweet saying “Dogecoin is the people’s crypto.” According to data on cryptocurrency website Coindesk, Doge immediately jumped to US$0.05798. And on Monday, February 8, the token spiked to 37 per cent in 24 hours to a record high of US$0.084945. By the end of the day, Dogecoin was up 18 per cent at a price of US$0.08008.
The meme-inspired cryptocurrency’s market value went beyond US$10 billion, putting it in tenth place among all the digital coins in the market. More recently, the Tesla CEO posted a picture of a fictional “Dogue” magazine, which was a parody of “Vogue”, leading to an 800 per cent surge in stock price.
The tech svengali also boosted the share price of Polish computer game maker CD Projekt, when he lavished praise on one of its games. The company’s stock soared as much as 19 per cent after Musk tweeted on January 28 saying that “the esthetics of Cyberpunk are incredible.” This was its biggest increase in price since June 2015. Several hours later, Musk continued professing his admiration for the game adding, “With Cyberpunk, even the hotfixes literally have hotfixes, but … great game.” CD Projekt’s stocks rallied the entire week along with some other shorted stocks.