MONEY / SOCIAL MEDIA
Elon Musk’s Tweet Increased a Company’s Stock Price by Nearly 5000% — Accidentally
Elon Musk can’t keep his hands off Twitter
Elon Musk can’t keep his hands off Twitter. Recently, he recommended that his followers should use Signal.
Immediately, some react to this — they buy shares. But not the shares of the app that Musk is referring to in the tweet. Instead, they buy “Signal Advanced” — the first hit when you search for “Signal Stock” on Google. (The Signal Foundation, which is behind the messaging app “Signal,” is not a stock company.)
The problem is that, according to the company’s website, it’s about health care tech. “Signal Advance Inc” is not the company behind the WhatsApp competitor.
Mistakes can always happen — even when money is involved. But Musk’s tweet has a violent impact: One day before the tweet, the share price was $0.60. On January 11, 4 days later, it was at an all-time high of almost $39.
By now, every investor should have noticed the mix-up. Nevertheless, the price is still many times higher than before the tweet.
What can we learn from this?
The case shows how a bubble can develop. The stock experienced a massive rise because Elon Musk recommended it — at least that’s what investors thought. Now that the price has plummeted again, some people have lost a lot of money.
No one is interested in making you rich.
Even if Elon meant a stock — what would he get out of it? Well, he could cause a pump & dump thanks to his reach — but that would certainly make him liable to prosecution.
Also, a serious stock tip would be irresponsible — not even Elon Musk can predict prices — the stock might have corrected downwards, and his followers would have lost money sooner or later.
People who are in the public eye have a reputation to lose. None of them wants that — not even Elon Musk.
We should not take our cue from others.
For a successful investment, you have to be there early — that’s a well-known motto. But to invest a lot of money based on a tweet is crazy, isn’t it?
Presumably, the rising share price was the second confirmation for many — the “here we go,” & the share rises to the correct price.
Who could have guessed that 9 letters on Twitter alone were responsible for the rise? Bubbles exist — and we can fall for them.
Emotional decisions are not acceptable. Really not.
A bad investment can happen to anyone. The hoped-for miracle did not occur. But something like this? I am a bit speechless myself. Buying a stock based on a non-specific tweet is really reckless & emotional. (Says the guy who bought the wrong share in a hurry because I mistyped the identification number).
Think twice about what you invest in.
