Unless you’ve been living under a rock for the past year, you’ve probably seen the Reddit army move markets. While several factors, like the economy, business decisions, fund managers, market pandits, and insiders continue to have a major impact on the markets, another significant driver has come in the form of influencers. A tweet is all it takes for millions to react! We saw that happen with Trump’s (in)famous tweets and now we are witnessing the same with celeb tweets.
Ever so often, Elon Musk appears like a knight, wielding Twitter like a sword that has the power to slice through market sentiment in one clean sweep. Why do his tweets have this hypnotizing impact on markets? Let’s have a look.
Hero to the Tweeple
People just can’t seem to get enough of Elon Musk. When Jeff Bezos was named the richest man on the planet in 2020, hardly anyone batted an eyelid. In January 2021, Elon Musk grabbed the #1 spot and the Twitterati was ablaze. Add to that his response to being named the world’s richest man – “How strange… Well, back to work.” – and people loved him even more!
Elon Musk has always been respected for his keen eye for design and innovation, as well as his business smarts. After all, this business magnate doesn’t just talk about his vision for the future, he sells it like no one else can. Take, for instance, his space exploration project. His fan club grew even larger in 2020, adding more Millennials, with Musk stressing the need for a sustainable future and eco-friendly vehicles.
Love him or hate him, but you just cannot ignore him, given the overwhelming news that comes along with Elon Musk! The Tesla CEO has more than 55.6 million followers on Twitter. To understand how massive this number is, compare it to Jeff Bezos’s 2.3 million, investor idol Warren Buffett’s 1.7 million and even social media tycoon Mark Zuckerberg’s 480K followers. That’s not all. Elon Musk’s tweets get an average +250K likes per tweet and are retweeted an average of +28K times, according to Twitter stats published by Social Tracker. Little wonder then that word spreads like wildfire when Musk tweets.
Elon Musk Tweets Move Stocks
It doesn’t take a genius to guess that Musk’s tweets move Tesla’s stock. In May 2020, Tesla’s stock took a nosedive within 24 hours of this tweet:
His power is not limited to Tesla, however. In January 2021, computer gaming company Cyberpunk 2077 saw its shares spike after Musk tweeted that the new model of Tesla’s Model S Plaid car would allow passengers to play the game.
Remember the hype around Reddit and GameStop in 2020? Musk’s tweet fueled a rally with a simple “Gamestonk!!” with a link to the WallStreetBets Reddit thread. Next thing we know, GameStop’s valuation adds more than $10 billion!
If you’re thinking this may have been a coincidence, consider this. All it took was for Musk to tweet “I kinda love Etsy” to send the craft ecommerce company’s stock higher by around 9%.
Elon Musk Tweets Move Cryptos
Cryptocurrencies reached record highs in April and crashed in May. Did Musk’s tweet cause this? Let’s look at his tweets and the NYSE Bitcoin index. The index was hovering around the 11,000-mark in early October 2020. In barely over 6 months, the index grew nearly sixfold, amid frenzied buying. Part of the rally before April was driven by Tesla’s decision to buys $1.5 billion worth of Bitcoin.
On March 24, Musk tweeted saying it would be possible to buy Tesla cars using Bitcoin. The NYSE Bitcoin index was then quoted around 51,373.004. In less than a month, the index appreciated over 20% to a record high of 63,247.809 on April 14, 2021.
And then came a rollercoaster ride down. On May 13, Musk tweeted that Tesla had suspended the purchase of vehicles using Bitcoin. The market witnessed another knee-jerk reaction, which saw the index plummet to a low of 36,543.621 on May 19. The index shed nearly 15% in merely four trading sessions and the exodus eroded more than 42% of the index value from its peak.
Another simple tweet by Elon Musk on May 19 signifying all is well resulted in the NYSE Bitcoin index bouncing back to the 41,000s.
It was Musk’s brand power that boosted much of the value of Dogecoin in 2021. The multi-billionaire business magnate became so taken up with Dogecoin that he dumped Bitcoin. Of course, he’s totally in touch with the pulse of his tweeple. When dumping bitcoin, he cited “environmental risks” associated with creating the cryptocurrency.
Dogecoin prices jumped after Musk tweeted plans for SpaceX to launch DOGE-1, a cubesat funded by the crypto, to the moon in the first quarter of 2022.
The once unheard of altcoin, which was invested only to mock cryptocurrencies, rose from $0.46 in December 2020 to a record high of $72.23 on May 8, 2021.
There is an old saying – “When America sneezes, the world catches a cold.” Well, Musk’s action on Twitter is somewhat similar. Good or bad, either way the action is profound. In the past, the markets have learned from investing gurus like Warren Buffet, Benjamin Graham, and George Soros. Let’s get used to the new-age way of investing – by following the influencers on Twitter.