Tesla Motors CEO Elon Musk.
Brendan McDermid | Reuters
Bitcoin’s value jumped more than 20% to $ 38,566 on Friday after Elon Musk, the richest person in the world, changed his personal Twitter biography to #bitcoin, fueling speculation that he bought more cryptocurrency.
Less than 24 hours earlier, the billionaire appeared to make the shares of CD Projekt, which makes the Cyberpunk 2077 game go up more than 12%, after he said via Twitter that a new model of Tesla’s S Plaid model car would allow passengers Play the game.
Several hours later, Musk said, “With Cyberpunk, even hotfixes literally have hotfixes, but … great game.”
On Tuesday, the CEO of Tesla and SpaceX fueled the frantic increase in GameStop shares by tweeting “Gamestonk !!” and a link to the Reddit WallStreetBets topic. The invented word is a combination of GameStop and “stonks”, which is slang for actions.
“There is a strange irony in Elon Musk’s ability to move the market, while attacking what he sees as abnormal market forces in short selling,” Dan Lane, an analyst at Freetrade, told CNBC. “It may be that this is finally the time to discuss the legitimacy of the practice.”
The tweet appeared to help GameStop’s valuation skyrocket to more than $ 10 billion in after-hours trading and forced some amateur trading apps to pause trading. But some people can lose a lot of money if GameStop’s stock price plummets.
Vincent Flood, host of the VideoWeek podcast, which analyzes the advertising market, said Musk’s tweets could “have devastating consequences for retail investors, while he and his friends get rich at the little boy’s expense.”
Ex-googler Rich Pleeth, a London entrepreneur and technology investor, agrees. He told CNBC that Musk can “enrich himself with a tweet”.
“He’s an innovator, but that doesn’t mean he’s above the law,” said Pleeth.
However, Max Levy, head of business development for online investment management application Nutmeg, said, “This has always happened in the capital markets,” listing Warren Buffett and Ray Dalio as other “influencers” in asset prices.
‘I kind of love Esty’
A few hours after your “Gamestonk !!” Musk tweeted “I kind of love Etsy”, with shares in the online craft market going up 9%.
The Securities and Exchange Commission, a regulator created in the 1920s to protect investors, declined to comment when CNBC asked if it was concerned about Musk’s ability to influence shares on Twitter.
The New York Stock Exchange also declined to comment, while the Nasdaq stock exchange, which focuses on technology, and a Musk representative did not immediately respond to CNBC’s request for comment.
Musk faced problems with the SEC for tweeting about Tesla’s shares. In August 2018, he said he wanted to make Tesla private for $ 420 a share and had secured funding for it. Musk and Tesla had to pay the SEC a $ 20 million fine each to resolve the lawsuit, and Musk has since agreed to submit his public statements about Tesla’s finances and other topics for his attorney’s assessment. He tweeted infamously last year that Tesla’s shares were “too high”, causing the shares to drop more than 10% immediately, although they have rebounded more than in a week.
Although Musk’s actions on Twitter had a particularly pronounced effect this week, he has been switching stocks and cryptocurrencies for some time. Earlier this month, Musk asked his 48.3 million followers to use the Signal encrypted messaging app, which is operated by a non-profit organization.
Wishing to support the company, investors rushed to grab shares of Signal, but many of them accidentally bought shares in a small component producer called Signal Advance, causing their shares to rise 1,100%.
New regulation?
“Regulators don’t just need to catch up, they need to proactively enforce the rules and clarify what is acceptable,” said Lane, from Freetrade. “And that goes for shorts, too.”
Lane added: “The reality is that the new brand of charismatic leader has a public platform now and is not limited to the board. It is up to the regulators how to handle this, but eventually it will be their responsibility to update the Rulebook.”
Hussein Kanji, a venture capitalist in London, told CNBC that he trusts the SEC to do its job and keep markets rational and fair.
“But Elon Musk acting as a final influencer and driving demand in a regulated bond market seems strange,” said Kanji. “If he were changing the volume of a consumer product, I wouldn’t raise an eyebrow.”
Steven Bartlett, founder of the social media agency The Social Chain and a technology investor, told CNBC that “public markets now have influencers like fitness and beauty.”
Musk has become the Zoella of public markets and there is no way around that for the SEC, Bartlett said.
– Additional reporting by Jessica Bursztynsky from CNBC.