Tweets from the President, Elon Musk, Kylie Jenner, and The Hollywood Reporter Created and Destroyed Up to $3 Billion in Market Cap
When powerful people tweet, markets move.
In the past few months, single tweets from President Trump, Elon Musk, Kylie Jenner, and The Hollywood Reporter have moved the financial markets by millions — sometimes billions — of dollars. The goal of this article is to illustrate the kind of tweets that move markets and how our platform, TweetTraders, can turn tweets about stocks or cryptocurrency into repeatable and executable occurrences that lead to financial profits.
Elon Musk Tweet Creates $3 Billion in Tesla Market Cap in Under 24 Hours
On August 7th at 12:48 AM ET, Tesla Inc. (Ticker: TSLA) Chief Executive Elon Musk (@elonmusk)jolted financial markets with a surprise proposal to take the electric-car maker private in what would be the biggest buyout in history. The tweet created $3 billion of market value in less than 24 hours.
Stock markets reacted swiftly and positively to the outspoken CEO’s tweet, sending Tesla shares from approximately $362.24 at the time of the tweet to a close of $379.57 later that afternoon, a gain of 4.78%. Looking at intraday data, the 48-hour peak from this news was ultimately the next morning at around 10:00 AM ET at $379.83, which represents an increase of 4.86% from the time of the tweet and total estimated new market capitalization of just over $3 billion.
Kylie Jenner Tweet Wipes Out $1.5 Billion of Snap’s Valuation
On February 21st at 4:50 PM ET, reality TV star, Kylie Jenner (@KylieJenner) said via Twitter she is no longer using Snapchat. The tweet is widely associated with wiping about $1.5 billion off Snap, Inc’s (Ticker: SNAP) market value by the end of the next trading day. Jenner has been one of Snapchat’s most influential users, wielding extraordinary influence on the platform.
“We believe this is an overreaction as Wall Street is hypersensitive to the app redesign,” Daniel Ives, Chief Strategy Officer and Head of Technology Research at GBH Insights, said in an interview with CNN. “With roughly 25 million followers, (Jenner) carries a loud mouthpiece that speaks to today’s knee-jerk reaction in shares.”
Overreaction or not, Jenner’s tweet sent Snapchat’s stock down from $18.64 at the close of the previous trading day prior to the tweet, to an intraday low of $17.05 the following day, erasing approximately $1.5 billion of total market value, or 8.53%.
Tweet from The Hollywood Reporter Leads to $2.2 Billion Market Cap Drop for CBS
On July 27th at 11:47 AM ET, The Hollywood Reporter (@thr) broke news via Twitter that The New Yorker was poised to publish an article that includes allegations of sexual misconduct on the part of embattled CBS Corporation (Ticker: CBS) Chairman and CEO Leslie Moonves. News of its imminent publication and the potential impact on the company that had been led by Moonves for some 20 years sent CBS’ stock down over 6% that day, erasing more than an estimated $1.1 billion of market value. The article had not even been released yet.
The stock proceeded to lose more than an estimated $2.2 billion of market value, or 11.34% in the first full trading day, following the article’s publication.
President Trump’s Tweet Creates $2.4 Billion Bump in Steel Stocks
For the past two years, the market has grown accustomed to President Trump’s (@realDonaldTrump) tweets. However, some of these tweets, particularly in areas like foreign trade where the President can exert significant influence, have moved markets. Here is just one example:
On March 1st at 7:12 AM ET, President Trump tweeted that the steel and aluminum industries needed “free, fair and smart trade”, adding to expectations he would announce tariffs on foreign imports. Investors targeting US-based steel companies immediately took notice. In the day of trading following the tweet, United States Steel Corporation (Ticker: X), Steel Dynamics, Inc. (Ticker: STLD), Nucor Corporation (Ticker: NUE) and AK Steel Holding Corporation (Ticker: AKS) gained a cumulative $2.4 billion of estimated market value.
On an individual basis, AK Steel rose as high as 13.2% intraday, with US Steel, Steel Dynamics and Nucor Corporation following suit with gains of 9.49%, 5.06% and 4.39%. The stocks then rolled over after CNBC reported that an announcement on [tariffs] Thursday was “unlikely” — illustrating the old adage: “Buy the rumor, sell the news.”
How to Monitor Twitter’s Impact on Stocks Using TweetTraders
While there is a repeatable strategy to identify new opportunities relating to each of the themes detailed in the examples above that we will delve into in later articles, first, let’s walk through one very noteworthy example to illustrate the power and repeatability of a Twitter-based trading strategy using TweetTraders.
November 1, 2015
On the evening of November 1, 2015, multiple news sources reported that Chipotle Mexican Grill, Inc. (Ticker: CMG) was closing 43 restaurants after an E. coli outbreak. The next trading day, Chipotle opened down nearly 5% from the previous close before hitting an intraday low that wiped out nearly $900 million of estimated market value.
Based on this news and related impact on Chipotle stock, a user of our TweetTraders platform could have set up real-time alerts to monitor all tweets that mention Chipotle (@chipotletweets) and/or The Centers for Disease Control & Prevention (@CDCgov). This could be refined with other keywords like “E. coli”, “#ecoli”, “#chipotle” “illness”, or “sick”, among other relevant words or complete phrases. Any of these would set up a real-time alert from TweetTraders that would have caught the following chain of events:
November 20, 2015
On the afternoon of November 20, 2015, multiple news sources reported that Chipotle’s E. coli problem had spread to six states. The stock proceeded to get crushed accordingly. A trader armed with real-time Twitter alerts from TweetTraders, using a combination of the simple search terms above, could have reaped significant profits. On that single trading day, the stock price of Chipotle dropped approximately 13% from an open of $612 to an intraday low of $534.20, erasing more than an estimated $2.2 billion of market cap. Based on easy-to-read data from our platform, a trader would also have been able to recognize that the stock may rebound within 48 hours post news — as it did on November 1st — and could have locked in profits accordingly.
This trade was not done paying off yet.
December 21, 2015
On the afternoon of December 21, 2015, multiple news reports again confirmed that Chipotle may be linked to a new outbreak of E. coli. Following suit, Chipotle stock dropped more than 11%, or an estimated $1.7 billion of market value, over the next two trading days.
Over the subsequent two years, there have been at least two more instances where this alert could have caught additional declines in Chipotle stock — once on July 7, 2016, where a rumor of a new illness sent the stock down nearly 4%, and more recently another 5% on August 16, 2018, where The Centers for Disease Control & Prevention reported that 700 people got sick after eating at an Ohio-based location. In each case, the trader could have used data from TweetTraders to estimate the peak of the decline with accuracy to achieve maximum profits. Just as easily, this alert could be set in advance for every restaurant chain across the country, as the stock of each would be expected to react in much the same way.
Twitter is the source of real-time information, and TweetTraders is a platform that allows investors to profit from news the instant it is made available. Through our easy-to-use interface, users can quickly identify the influencers impacting the stocks or cryptocurrencies they care about, validate trading strategies related to how news can impact stocks or cryptocurrencies and set up real-time alerts for actionable insights that lead to profit. More importantly, with historical data down to the minute, TweetTraders improves trade execution by giving insight into when to buy or sell based on past trends.
Sign up to become a beta user of TweetTraders and enjoy the platform free of charge during this period. All we ask in return is your feedback on how to improve the feature-set prior to our official launch to the app stores later this year.
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The information provided in TweetTraders and accompanying material is for informational purposes only. It should not be considered legal or financial advice.
