Tesla Motors CEO Elon Musk.
Brendan McDermid | Reuters
Bitcoin’s value rose more than 20% to $ 38,566 on Friday after Elon Musk, the richest person in the world, turned his personal Twitter bio into #bitcoin, sparking speculation that he bought more of the cryptocurrency.
Less than 24 hours earlier, the billionaire share in CD Project, which makes the Cyberpunk 2077 computer game, seemed to rise more than 12% after he said via Twitter that a new model of Tesla’s Model S Plaid car passengers will let play. the game.
Hours later, Musk said, “With Cyberpunk, even the hotfixes literally have hotfixes, but … great gameplay.”
The Tesla and SpaceX CEO fueled the insane boom in GameStop shares on Tuesday when he shouted ‘Gamestonk !!’ tweeted. and a link to the WallStreetBets Reddit thread. The word made up is a combination of GameStop and ‘stonks’, which is a slang term for stocks.
“There’s a strange irony in Elon Musk’s ability to move the market while attacking what he sees as unnatural market forces in short selling,” Freetrade analyst Dan Lane told CNBC. “It may be that it’s finally time to have a discussion about the legitimacy of the practice.”
The tweet apparently helped boost GameStop’s valuation by more than $ 10 billion in after-hours trading and forced some amateur trading apps to disrupt trading. But some people lose a lot of money when the share price of GameStop collapses.
Vincent Flood, presenter of the VideoWeek podcast, which looks at the advertising market, said Musk’s tweets could “have devastating consequences for retail investors as he and his friends enrich themselves at the expense of the boy.”
Former Googler Rich Pleeth, an entrepreneur and technology investor in London, agreed. He told CNBC Musk could ‘enrich himself with one tweet’.
“He’s an innovator, but that does not mean he’s above the law,” Pleeth said.
However, Max Levy, head of business development at the online investment management app Nutmeg, said: “This has always happened in capital markets, citing Warren Buffett and Ray Dalio as other“ influencers ”on asset prices.
‘I quite like Esty’
A few hours after his “Gamestonk !!” tweet, Musk tweeted “I kinda love Etsy,” with shares in the online craft market rising 9%.
The Securities and Exchange Commission, a regulator set up in the 1920s to protect investors, declined to comment when asked by CNBC 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 focused on technology, and a Musk representative did not immediately respond to CNBC’s request for comment.
Musk has been having trouble with the SEC for tweeting about Tesla’s share. In August 2018, he said he wanted to take Tesla privately at $ 420 per share and that he had secured the financing for it. Musk and Tesla each had to pay a $ 20 million fine to the SEC to settle the case, and Musk has meanwhile agreed to submit his public statements on Tesla’s finances and other topics to his legal adviser. He tweeted last year that Tesla’s share was ‘too high’, and the shares immediately fell more than 10%, although within a week they gave more than recovery.
While Musk’s Twitter action this week has had a very clear effect, he has been moving stocks and cryptocurrencies for a while. Earlier this month, Musk requested its 48.3 million followers to use the encrypted messaging app Signal, which is run by a non-profit company.
Investors wanted to support the company, but they wanted to take up shares in Signal quickly, but many of them accidentally bought shares in a small component manufacturer called Signal Advance, which increased the shares by 1100%.
New regulation?
“Regulators do not just have to catch up, but must proactively enforce rules and make clear what is acceptable,” Freetrade’s Lane said. “And the same goes for the shorts.”
Lane added: “The reality is that the new brand of charismatic leader now has a public platform and is not limited to the boardroom. It depends on the regulators how they handle it, but ultimately the task rests on them to rule book. “
Hussein Kanji, a venture capitalist in London, told CNBC that he trusted the SEC to do its job and keep the markets rational and fair.
“But Elon Musk acting as an ultimate influencer and driving demand in a regulated security market seems strange,” Kanji said. “If he shifts volume for a consumer product, I will not raise an eyebrow.”
Steven Bartlett, founder of social media agency The Social Chain and a technology investor, told CNBC that “public markets now do influencers like fitness and beauty.”
Musk has become the Zoella of public markets and there is no way to circumvent it for the SEC, Bartlett said.
– Additional coverage by CNBC’s Jessica Bursztynsky.