“I kind of love Etsy”, Musk tweeted, adding an accompaniment tweet that he bought a woolen helmet Marvin the Martian (the alien from Bugs Bunny cartoons) for his dog – similar to Musk, of course, wants to go to Mars one day with his other company, SpaceX.
The stock retreated after the market opened. It opened 8% more, but was stable in the late morning.
Still, as there was no other company news on Etsy on Tuesday morning, it seems safe to say that Musk’s tweet was the main catalyst for the stock’s rise.
This, of course, is ridiculous. It is also another example of the increasingly short-term nature of the stock market, where algorithms can drive prices and individual investors using services like Robinhood are eager to make money fast.
Recently, the stocks of companies that many professional investors are selling – because they expect stocks to fall, as companies are struggling or overvalued – are rising thanks to the support of brokers on a popular Reddit board. GameStop (GME), Blackberry (BB), Bed Bath & Beyond (BBBY), Macy’s (M) and AMC (AMC) are just a few examples.
But Etsy looks nothing like these companies in the sense that it is thriving, in part because of the strong demand for masks during the Covid-19 pandemic. Analysts predict Etsy’s sales almost doubled in 2020 and earnings per share increased by more than 175%.
Musk’s tweet put a bigger spotlight on Etsy, though, and it is not the first time that he has triggered a major movement in an asset other than Tesla. The price of the dogecoin digital currency skyrocketed at the end of last month, when he released it on Twitter.
Still, it’s a little ironic that Etsy is benefiting from Musk’s endorsement. Although Tesla was finally added to the S&P 500 in December, many on Wall Street were surprised when Tesla was dismissed by the index in September. The company that was added at that time, instead of Tesla? Etsy.