This text could be discovered within the MyWallSt App, alongside an audio companion. Sign up today for a free account and get entry to dozens of expertly written articles and analyst opinion items each month.
Love him or hate him, no one is launched with the phrases “love him or hate him” greater than Elon Musk. The enigmatic CEO of Tesla (NASDAQ: TSLA) and SpaceX, and the reigning Time’s Individual of The Yr, is certainly essentially the most influential enterprise chief on the market. From smoking weed on podcasts to dad dancing on stage, he’s by no means shy of creating headlines, more often than not to the ire of his shareholders.
Nowhere does he rejoice this consideration and affect greater than together with his Twitter (NYSE: TWTR) account. He boasts virtually 80 million ardent followers and a attain that expands effectively past that determine. He’s a fan of utilizing the platform to share his many, many ideas on the world with us which may have various penalties. Impressed by Monday’s tweet through which he said he received’t promote his Bitcoin, Ethereum, and Dogecoin holdings and the inevitable worth bump that accompanied it, I’m going to have a look again at Musk’s most notorious social media actions and the broader impact he can have on monetary markets.
On an unrelated observe, only for kicks, right here’s Investopedia’s definition of securities fraud:
Securities fraud, additionally known as inventory or funding fraud, is a kind of significant white-collar crime that may be dedicated in a wide range of varieties however primarily includes misrepresenting info buyers use to make choices.
Is that this Elon Musk’s most notorious tweet?
Let’s kick it off with a doozy. Musk’s piece de resistance on the subject of market manipulation-led trolling occurred in 2018 when he claimed he would take Tesla personal as soon as it reached $420 a share — this obsession with infantile numbers is a weird undertone to a lot of his social media presence. As you’d count on, such blockbuster information got here as a little bit of a shock to many buyers, who got the selection of promoting at $420 or holding and going personal.
Surprisingly, for somebody who says just about no matter he needs sans consequence, this specific tweet had some repercussions, with the SEC finally charging him with securities fraud. Listed here are the sanctions from these 61 characters:
- Musk was ousted as Tesla Chairman and banned from the place for 3 years
- Tesla was fined $20 million
- Musk himself was additionally fined $20 million
- He agreed to have his tweets pre-approved by Tesla’s in-house counsel
- Tesla was compelled so as to add two new unbiased administrators to its board.
The SEC had this to say:
“Musk knew that he had by no means mentioned a going-private transaction at $420 per share with any potential funding supply, had carried out nothing to analyze whether or not it could be potential for all present buyers to stay with Tesla as a personal firm through a ‘particular objective fund,’ and had not confirmed help of Tesla’s buyers for a possible going- personal transaction”.
Market response: Tesla (TSLA) down 24% in 4 weeks.
Did Elon Musk truly promote shares due to a Twitter ballot?
I do know what you’re considering. That’s a reasonably agency slap on the wrist, and with a brand new assessment course of in place, the person will need to have discovered his lesson, proper?
Unsuitable.
Whereas there are numerous tweets in between, Musk’s subsequent actually nice transgression was a ballot through which he requested his followers whether or not he ought to promote 10% of his Tesla holdings. They stated sure. And he did. Of the three.5 million votes on the ballot, 58% voted to promote, and Musk would go on to relinquish greater than $16 billion of Tesla inventory over the following two months.
What wasn’t included on social media was the looming earnings tax invoice of round $15 billion going through the Tesla CEO and the eventuality that he would have needed to promote a big quantity of shares with a purpose to pay the tax expense connected to his expiring inventory choices.
Possibly Twitter’s character restrict was responsible for this omission? Or possibly the devoted CEO who by no means sells any of his personal shares wished to keep up this visage. As an alternative of promoting huge quantities of Tesla inventory to pay an earnings tax invoice, he’s now promoting huge quantities of Tesla inventory as a result of his followers stated so and he’s a unusual man who simply does issues like that. Who may say? Effectively, the truth that a few of the consequent gross sales have been pre-arranged weeks earlier than the ballot might skew public opinion, however actually, who may say?
The cherry on high of this subterfuge sundae remains to be forming, nevertheless, with the SEC opening an investigation into each Elon and his brother Kimbal for insider buying and selling. Kimbal sits on Tesla’s board of administrators and bought $108 million value of shares the day earlier than the ballot was printed. The investigation will hinge on whether or not Elon advised his brother of the ballot earlier than tweeting it out to the world. At finest, a horrible search for the corporate, at worst, potential jail time.
Market response: Tesla (TSLA) down 27% in 6 weeks.
How Elon Musk has influenced the crypto world
If there was ever an trade extra capricious than the inventory market, it needs to be crypto. The dangerous belongings have actually caught Musk’s consideration, the place his presence could also be felt even stronger. A lot in order that Coindesk named him as one of the influential figures within the trade. A lofty title for an occasional commentator. The fixed commentary on Bitcoin, and Dogecoin, specifically, led to the creation and destruction of billions in market worth.
His crypto manipulation can’t be nailed down to at least one specific tweet — does that imply it’s decentralized? — however reasonably an incessant toing and froing that’s positive to have made trade consultants pull their hair out in frustration. Right here’s a fast style from the beginning of final 12 months when hypothesis available in the market was most rife:
- He kicked off final January by altering his Twitter bio to #bitcoin sending the cryptocurrency up 13%.
- In February, he tweeted “Doge” amongst a litany of different pro-Dogecoin tweets and memes that despatched the value of Dogecoin up 50% within the house of a day.
- In March of 2021, he tweeted: “You can now buy a Tesla with Bitcoin”. Now he’s making some actual strikes with Tesla-backed actions, reasonably than posting memes. It didn’t final lengthy, nevertheless. Simply two months later, he would announce that Tesla would not be accepting Bitcoin funds resulting from environmental issues round mining. The worth of Bitcoin virtually halved within the house of per week.
- In April, he tweeted: “The Dogefather SNL May 8”. DOGE’s parabolic rise — which Musk can declare a variety of accountability for — peaked earlier than the present. It grew greater than 2,000% from February to Might. He would go on to name the cryptocurrency “a hustle” on-air, sending it crashing. It has fallen 70% since.
Whereas Musk hasn’t given up on his crypto-puppeteering — this previous January he announced you can buy Tesla merchandise with Dogecoin — it has appeared to calm barely together with the market. One factor is for sure although, if there is a chance to flex his affect someplace, he’s proven time and time once more he’ll take it.
The very best of the remainder of Elon Musk’s Twitter account
Musk doesn’t must say so much to sway market sentiment both, even when he’s not making an attempt to. Right here’s a listing of a few of his most impactful one-liners:
- “Gamestonk!!” — This tweet was accompanied by a hyperlink to the WallStreetBets subreddit. GameStop popped 157% in after-hours buying and selling amidst a wider short-squeeze. Robust to provide Elon an excessive amount of credit score for this however after all he couldn’t sit out the enjoyable.
- “Use Signal” — even when he’s not making an attempt to affect the market, he nonetheless influences the market. Musk endorsed the privately owned, encrypted messaging app Sign. After this tweet, nevertheless, the over-the-counter healthcare inventory Sign Advance — ticker image SIGL — jumped virtually 6,000%!
- “I kinda love Etsy” — after shopping for a hand-knitted hat for his canine, Elon tweeted his appreciation for the craft market. Etsy inventory popped 8% in mid-day buying and selling earlier than closing up 2%.
- “Tesla stock price is too high imo” — easy and efficient trolling right here, Tesla shares fell 10% on the day earlier than shortly recovering.
- “Baby Shark crushes all! More views than humans.” — closing out with presumably essentially the most weird, Elon’s ideas on the migraine-inducing Child Shark despatched Samsung Publishing — which is a significant shareholder within the tune’s producer — 10% increased.
Elon Musk’s Twitter account In his personal phrases
Weird, benign, bored, bravado, unintentional or possibly intentional, sinister, fraudulent, pontificating, securities fraud, insider buying and selling, trolling, meme-ing, deceptive.
Choose any three and also you most likely wouldn’t be too far-off from describing the chaos that’s Elon Musk’s Twitter account. It appears he will get a kick out of the affect he wields. If there’s a enjoyable anti-establishment pattern doing the rounds, he received’t be far behind. The richest man on the earth, sitting in his ivory modular residence, stitching discord and mayhem at a whim. A Gen-Z Bond villain.
The true reply is, ought to we be involved about it? Is his conduct within the Twittersphere a tangible threat for Tesla? I assume it relies on how severely you’re taking it. Whether or not you see ‘funding secured’ or “inventory worth is simply too excessive” as a bored genius letting off some steam, or a sequence of genuinely harmful conduct that may finally derail one of the thrilling firms in the marketplace.
Nonsense or nefariousness. Who can say?
I’ll let the person himself shut out this piece in his personal phrases:
Don’t neglect which you could hearken to this weblog at no cost within the MyWallSt App. Sign up today for a free account and get entry to dozens of expertly written articles.
