A brief analysis of Elon Musk’s social media influence on financial markets
The ultra-wealthy tech tycoon has significantly altered share prices with his controversial tweets.
In 2022, South African-born entrepreneur Elon Musk showed a striking change in his investment approach when he bought Twitter. However, this was not his first brush with fame with the social media giant; having gathered an impressive 172 million followers as of February 2024, he is known on Twitter for his erratic tweets considered bizarre for a man of his stature.
Despite this seemingly bad notoriety, his charisma and eccentricity appeal to Twitter’s younger audience. His extreme wealth has also gained him a following from various investors, who seek to gain financial knowledge from the entrepreneurial mogul. However, the crossover of his unconventional social media presence and his investors can at times be problematic, causing significant movements in financial markets.
His negative effects on markets
Whether using obtuse levity or tweeting with general ignorance, Elon Musk has seen tweets cause a significant decrease in share prices — particularly Tesla’s.
A significant reason for this is due to his seemingly perpetual unprofessionalism. During the 2018 Tham Luang Cave incident, Musk posted a now-deleted tweet baselessly inferring that one of the divers in the rescue team was a paedophile, causing a swift 4% loss in Tesla’s stock value.
One reason for this is simply due to the ill-nature of the joke; some investors would rather not be associated with somebody who not only jokes about paedophilia but also makes facetious remarks regarding an event that resulted in a death.
Another reason is the worry that Musk’s erraticism will permeate outside of social media. We’ve already seen that his tweets directly affect share values; this does not just affect Musk himself but also poses a threat to the investor’s net worth. Furthermore, should his unpredictable unprofessionalism continue into his work life, what damage could be directly done to the companies he manages?
His positive effects on markets
Despite his evident carelessness, Elon Musk has shown that he can raise stocks, albeit in a ‘unique’ way. Referring to the problematic crossover of investors and eccentricity, when such investors are the young audience that he often attracts, numerous instances of increased share values can be traced back to Musk.
For example, when Musk promoted Dogecoin, a satirical cryptocurrency, through a series of jocular tweets in 2021, its share price increased by over 7000% in just over three months. Improvements in Bitcoin and Etsy stocks were also observed when he respectively made #bitcoin his Twitter bio and wrote a tweet praising Etsy. Thus, by utilising modern humour and exercising his successful status, Musk can effectively target younger investors on Twitter.
Despite Elon Musk’s unique ability to influence the younger generation through social media, he often misuses it in a way that makes him appear childish and unprofessional, causing greater negative market trends. However, occasional observed efficacy has proven his ability useful. Perhaps all he needs to do is harness it such that he can maturely guide the desired audience into buying shares in his companies.
