Elon Musk And His Rise As A 'FinTwit' Influencer

When Tesla Inc TSLA CEO Elon Musk in 2018 famously tweeted “funding secured” and promised to take Tesla private at $420 a share, investors took notice. Although he never followed through, the tweet cost him and the company a combined $40 million to settle fraud charges with the U.S. Securities and Exchange Commission.

This hasn’t deterred him from tweeting, however. Musk has continued to influence share prices of not only Tesla but other companies as well through his platform on Twitter.

Early Influences: Although only added to the Merriam-Webster dictionary in 2019, “influencer” is not a new idea. SocialMediaToday described en English potter named Wedgwood as an early form of influencer, for creating in 1760 a tea set for the Queen of England. In the 18th century, members of the monarchy were the most famous influencers in the West, and Wedgwood's marketing helped him win “royal-approved” brand recognition that still exists today.

Modern Influence: In modern times, social media platforms like Facebook, Inc.'s FB Instagram and Snap Inc's SNAP Snapchat have become the go-to venues for brands to advertise their products through the use of social media influencers.

Twitter Inc TWTR has lagged behind its competitors as an influencer space, however. But it does have sway in the area of finance, giving rise to influencers on "FinTwit," or Finance Twitter.

Musk is among the few CEOs of a major company to possibly hold this title. He is known to let loose on Twitter, often posting thoughts on companies, stocks and cryptocurrencies in a manner that can sometimes seem unhinged. With 48.4 million followers, however, there’s ample proof that his tweets influence share prices and his celebrity following can further intensify price action as well-known athletes and musicians echo his sentiments.

Despite new investigations by the SEC over his tweets on Dogecoin DOGE/USD this year, Musk seems unfazed by the U.S. federal agency’s threats, and his Twitter behavior has not changed. This has helped Musk gain a reputation as a rebel who fights against the Wall Street elite and wants the average FinTwit investor to win. Despite being the richest person in the world, FinTwit followers treat Musk as one of their own, often asking him questions and sometimes even receiving a response.

Holding Sway: Musk tweets played a role in Dogecoin's running to an all-time high early last month. They also featured in the GameStop Corporation GME mania. On Jan. 26, Musk posted “Gamestonk!!” followed by a link to the r/WallStreetBets forum. This was another factor in the 225% rise over the next three days in GameStop shares.

Earlier that day, Musk influenced the share price of Etsy Inc ETSY when he posted “I kinda love Etsy” and “bought a hand knit wool Marvin the Martian helm for my dog.” His tweets sent shares of the e-commerce site soaring 9% to $225.74, before markets opened.

Musk isn’t always so literal, however, and he’s been known to tweet in riddles, leaving fans to guess at the meaning. On May 1 last year, Musk tweeted, “Tesla stock price is too high imo,” sending the company’s share price tumbling 11%. It’s not known whether Musk intended to push down the stock price of his own company or whether he wanted to give his followers a hidden message. A few months later in August, Tesla announced a stock split of 5-1 — echoing the date he posted the tweet.

Musk has also unintentionally sent shares soaring. In January, Musk tweeted support for the encrypted messaging app Signal, run by a non-profit, which inadvertently sent shares of Signal Advance, a completely unrelated company, soaring 1100%.

With millions of followers hanging off his tweets, it’s no wonder Musk has the ability to move stocks. Some traders have learned to use it to their advantage and follow his tweets for buy and sell signals. Others aren’t too happy about his powers as a financial influencer and want him to stop. Traders and investors may just have to learn to get used to it, though, as so far even the SEC has been unable to stop him.