“I kind of like Etsy,” Musk said posted on Twitter, adding in a sequel tweet that he bought a Marvin the Martian wool helmet (the alien in the Bugs Bunny cartoon) for his dog – fitting that Musk, of course, wants to go to Mars one day with his other company, SpaceX.
Given that there was no other news about the company from Etsy on Tuesday morning, it seems safe to say that Musk’s tweet was the main catalyst for the stock’s growth.
That, of course, is ridiculous. It is also another example of the short-term nature of the stock market, where algorithms can determine prices, and individual investors using services such as Robinhood are eager to win quickly.
Recently, the shares of companies that many professional investors shorten – because stocks are expected to decline as companies struggle or are overvalued – instead, are largely due to the support of traders on a popular Reddit board. GameStop (GME), Blackberries (BB), Bed Bath & Beyond (BBBY), Macy’s (M) and I HAVE C (I HAVE C) these are just a few examples.
But Etsy does not resemble these companies in the sense that it thrives, in part due to strong demand for masks during the Covid-19 pandemic. Analysts forecast that Etsy sales will almost double in 2020 and that earnings per share increased by more than 175%.
Musk’s tweet, however, put more emphasis on Etsy and it’s not the first time he’s triggered a big move on an asset other than Tesla. The price of the digital currency dogecoin appeared at the end of last month, when it promoted it on Twitter.
However, it’s a bit ironic that Etsy gets Musk’s approval. Although Tesla was finally added to the S&P 500 in December, many on Wall Street were surprised when Tesla was defeated for the index in September. The company that was then added in place of Tesla? Etsy.