In 2013, two software developers and internet jokesters decided to combine the two greatest phenomena of the 2010s – Bitcoin and ‘Doge’, a famous internet meme. The product was the cryptocurrency, Dogecoin. While the coin gained significant popularity initially, it eventually collapsed in 2018 and was quickly forgotten.
It wasn’t until January 2021 that meme-currency was resurrected and it was Elon Musk’s famous tweet of ‘Dogue’ that triggered its rebirth. Dogecoin increased in value by 800% in just 24 hours as Musk continued to post encouraging tweets about the coin.
That wasn’t the first time that Elon Musk’s influence over the financial markets was noticed. In 2018, US Securities and Exchange Commission (SEC) sued the billionaire for tweeting misleading and potentially damaging information to investors, in relation to his tweet about taking Tesla private. The tweet caused Tesla’s stock to skyrocket by 11%.
Tesla stock price is too high imo
— Elon Musk (@elonmusk) May 1, 2020
Musk claimed that the allegations were unjustified, and as a result, both he and the company paid $20 million each in fines. Musk was also forced to step down from his role as chairman of Tesla for at least three years. Musk even agreed to have his public statements about Tesla and other market-moving topics be vetted by SEC’s legal counsel first.
However, the lawsuit did not stop Musk from posting his infamous tweets – Musk has since tweeted about Tesla’s stock price being too high, which immediately sent the share price to plummet to a low of “$686.93, shaving off billions of dollars from the company’s market cap.”
A year later, Musk would post a poll on whether he should sell 10% of his Tesla shares in a bid to prove that he does not condone “tax avoidance” for the ultra rich.
Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock.
Do you support this?
— Elon Musk (@elonmusk) November 6, 2021
The poll attracted more than 3.5 million votes, with nearly 58% voting in favour of the share sale. Musk proceeded to sell over $15bn in TSLA shares in the following days, causing the company’s stock to plummet by over 20% in less than a week over Musk’s selling spree.
Musk has largely contributed to Bitcoin’s growth by changing his personal Twitter bio to ‘#bitcoin’, igniting a bull market and causing the coin to jump by over 20%. Musk also infamously contributed to Gamestop’s price rally after tweeting “Gamestonk!!”
Money is not the objective
Some people believe that Musk’s tweets are a form of ‘trolling’. Charismatic leaders like Elon Musk have the ability to utilize their platforms to influence the actions of their followers. Nowadays, retail traders have more access to financial instruments than ever before, and can easily be swayed by the tweets of major market influencers.
Critics believe that Musk’s “broad appeal and public-facing Twitter account are good for his business,” which explains the controversial tweets. An outspoken CEO helps reduce Tesla’s marketing spend and saves the company advertising costs. But on the other hand, Musk’s comment on Tesla’s stock being too high was actually damaging for the company.
Most entrepreneurs’ main focus is to generate profit, not necessarily a negative goal but sometimes one that is closely tied with greed. Musk argues that money is not what motivates his endeavours, but instead his passion for innovation and building environment-friendly means of transportation.
The Big Impact
The power of social media for publicity is something many brands, businesses, celebrities and even politicians have embraced, but traders need to be well aware of the damage these tweets can have on their portfolio, if they fail to keep up with the latest updates.
Actions of influential people can shape the financial decisions of their followers and those looking for opportunities in markets. Trends in financial markets can have a big impact on the lives of countless people, regardless of if they participate in those trends or not. While it’s important to monitor profiles of high-profile individuals, it’s advisable to do so with caution.
Tesla Inc. is available as a stock CFD on all BDSwiss platforms.