CEO at Tesla Motors Elon Musk.
Brendan McDermid | Reuters
Bitcoin rose more than 20 percent to $ 38,566 on Friday after Elon Musk, the world’s richest person, changed his personal biography on Twitter to # bitcoin, fueling speculation that he had bought more of the cryptocurrency .
Less than 24 hours earlier, the billionaire requested shares in CD Projekt, which makes the Cyberpunk 2077 computer game grow by more than 12% after saying via Twitter that a new model of the Tesla Model S Plaid car would allows passengers to play. the game.
A few hours later, Musk said, “With Cyberpunk, even quick fixes have literally quick fixes, but … great gameplay.”
On Tuesday, the CEO of Tesla and SpaceX fueled the frantic growth of GameStop shares when he posted on Twitter “Gamestonk !!” and a link to the Reddit WallStreetBets thread. The word invented is a combination of GameStop and “stonks”, which is a slang term for actions.
“There’s a strange irony about 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. “This may finally be the time to have a discussion about the legitimacy of the practice.”
The tweet appeared to help the GameStop rating grow to over $ 10 billion in after-hours trading and forced some amateur trading apps to discontinue trading. But some people will lose a lot of money if the price of GameStop shares falls.
Vincent Flood, the presenter of the VideoWeek podcast, who watches the advertising market, said that Musk’s tweets could “have devastating consequences for retail investors, while he and his friends get rich at the expense of the little guy.”
Former Googler Rich Pleeth, a London-based entrepreneur and technology investor, agreed. He told CNBC that Musk could “get rich with a single tweet.”
“He’s an innovator, but that doesn’t mean he’s above the law,” Pleeth said.
However, Max Levy, head of business development at Nutmeg’s online investment management app, said, “This has always happened in the capital markets,” listing Warren Buffett and Ray Dalio as other “influencers.” regarding asset prices.
“I like Esty a bit”
A few hours after “Gamestonk !!” tweet, Musk wrote on Twitter “I like Etsy a bit”, the shares on the online craft market then increasing by 9%.
The Securities and Exchange Commission, a regulatory body set up in the 1920s to protect investors, declined to comment when CNBC asked if it was concerned about Musk’s ability to influence actions on Twitter.
The New York Stock Exchange also declined to comment, while the technology-focused Nasdaq and a representative for Musk did not immediately respond to CNBC’s request for comment.
Musk has faced problems with the SEC because he posted on Twitter about Tesla shares. In August 2018, he said he wanted to take Tesla private for $ 420 a share and that he had secured funding to do so. Musk and Tesla had to pay the SEC a $ 20 million fine for settling the lawsuit, and Musk has since agreed to make public statements about Tesla’s finances and other issues under investigation by his attorney. He revealed on Twitter last year that Tesla shares were “too big”, immediately sending shares with less than 10%, although they recovered in a week.
While Musk’s Twitter actions have had a particularly pronounced effect this week, he has been changing stocks and cryptocurrencies for some time. Earlier this month, Musk urged its 48.3 million followers to use the encrypted messaging application Signal, which is operated by a non-profit organization.
Eager to support the company, investors rushed to take shares in Signal, but many of them accidentally bought shares in a small component manufacturer called Signal Advance, sending its shares 1,100%.
New regulation?
“Regulators need to not only catch up, but proactively enforce the rules and clarify what is acceptable,” Freetrade’s Lane said. “And that goes for shorts, too.”
Lane added: “The reality is that the new charismatic leader brand now has a public platform and is not limited to the boardroom. It’s up to the regulators to deal with this, but in the end, it’s up to them 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, who acts as a final influencer and increases demand in a regulated securities market, seems strange,” Kanji said. “If I moved the volume for a consumer product, I wouldn’t raise an eyebrow.”
Steven Bartlett, founder of 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 procurement and there is no way around the SEC, Bartlett said.
– Additional reporting by CNBC’s Jessica Bursztynsky.