Elon Musk’s tweets are rising in the market – and some investors are worried


Elon Musk, CEO of Tesla Motors.

Brendan McDermid | Reuters

The value of bitcoin rose 20% to $ 38,566 on Friday after Elon Musk, the world’s richest man, changed his personal Twitter bio to # bitcoin, sparking speculation that he had bought more cryptocurrencies.

Less than 24 hours ago, the billionaire indicated shares in CD Projekt, which makes the Cyberpunk 2077 computer game, to grow by more than 12% via Twitter that a new model of Tesla’s Model S plaid car would be offered to passengers. Will allow to play. sport.

Several hours later, Musk said: “With Cyberpunk, even GPUs have really hotfixes, but … great games.”

On Tuesday, the CEOs of Tesla and SpaceX fanned the frenzied surge on GameSom shares when they tweeted “GameCon” !! And a link to the WallStreetBets Reddit thread. The word formed is a combination of gametop and “stonks”, a slang term for shares.

Freetrade analyst Dan Lane told CNBC, “There is a strange irony of Elon Musk stepping into the market that he sees as unnatural market forces in low sales.” “It may be that it is finally time to discuss the validity of the practice.”

The game appeared to skyrocket GameTop’s valuations to help businesses with more than $ 10 billion and forced some amateur trading apps to stop trading. Some people lose a lot of money if GameStop’s stock price goes down.

Vincent Flood, a presenter of the VideoWalk podcast that looks at the advertising market, said Musk’s tweets “can have disastrous consequences for retail investors while he and his friends enrich themselves at the expense of the little man.”

Ex-Gogler Rich Pleath, an entrepreneur and tech investor in London, agreed. He told CNBC that Musk “can enrich himself with a tweet.”

“He is an innovator, but that does not mean he is above the law,” Plyth said.

However, Max Levy, head of business development at the online investment management app Nutmeg, said: “It’s always happened in the capital market,” listing Warren Buffett and Ray Dalio as other “influences” on property prices.

‘I kinda love Estee’

His “GameStonk !!” A few hours after Musk tweeted, “I Thought Love AT,” with shares in the online craft marketplace, later rose 9%.

The Securities and Exchange Commission, a regulator set up in the 1920s to protect investors, declined to comment when CNBC asked if it was related to Musk’s ability to influence stocks on Twitter.

The New York Stock Exchange also declined to comment, while a representative of the tech-focused Nasdaq Stock Exchange, and Musk, did not immediately respond to CNBC’s request for comment.

Musk has faced problems with the SEC for tweeting about Tesla’s stock. In August 2018, he stated that he wanted to take Tesla private at $ 420 per share and received the money to do so. Musk and Tesla each had to pay a $ 20 million fine to the SEC for disposal of the suit, and Musk has since agreed to make public statements about Tesla’s finances and other topics to make its legal statements. He notoriously tweeted last year that Tesla’s stock was “too high”, sending the shares immediately over 10%, although they were more than rebound within a week.

While Musk’s Twitter actions have had a particularly pronounced effect this week, he has been shifting stocks and cryptocurrencies for some time. Earlier this month, Musk urged his 48.3 million followers to use the encrypted messaging app Signal, which is run by a nonprofit.

Eager to return the company, investors rush to snap shares in Signal, but many of them accidentally bought shares in a small component manufacturer called Signal Advance, sending their stock up to 1,100%.

New regulation?

“Regulators Lane said,” Regulators don’t have to catch the bus, they need to implement and clarify the rules. “And the same goes for shorts.”

Lane said: “The reality is that the charismatic leader’s new brand now has a public platform and is not limited to the boardroom. It is up to regulators how they deal with it but ultimately, they will have an onus to update . Rulebook. “

Hussein Kanji, a venture capital investor in London, told CNBC that he trusts the SEC to do its job and to keep the markets rational and fair.

“But Elon Musk acting as an ultimate influencer and driving demand in a regulated securities market seems strange,” Kanji said. “If he was increasing the volume for a consumer product, I wouldn’t raise an eyebrow.”

Steven Bartlett, founder of social media agency The Social Chain and a technology investor, told CNBC that “public markets now have people with influences like fitness and beauty.”

Musk has become the zoella of public markets and there is no way around it for the SEC, Bartlett said.

– Additional reporting by Jessica Bersjitzky of CNBC.

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