Elon Musk's tweets move the markets and this causes concern for investors
Bitcoin price jumped more than 20% to $ 38,566 on Friday after Elon Musk, the richest man in the world, changed his personal biography on Twitter to #bitcoin, fueling rumors that he bought more cryptocurrency..
Less than 24 hours earlier, the billionaire may have pushed shares in CD Projekt, creator of the Cyberpunk 2077 computer game, which surged more than 12% after he tweeted that Tesla's new Model S Plaid would allow passengers to play the game.
Several hours later, Musk wrote: «Cyberpunk even has fixes, but … great game».
The Tesla and SpaceX CEO spurred a frenzied surge in GameStop stock on Tuesday, tweeting «Gamestonk!!» and posting a link to the WallStreetBets thread on Reddit. The made up word is a combination of GameStop and «stonks», what slang means stocks.
Elon Musk tweet sends ‘Cyberpunk 2077’ game-maker stock soaring
«There is a strange irony in Elon Musk's ability to move the market while attacking what he sees as unnatural short-selling market forces.», – Freetrade analyst told CNBC Dan Lane (Dan Lane). «It may be time to discuss the legality of this practice.».
The tweet may have helped boost GameStop's valuation to more than $ 10 billion outside business hours and forced some mass investor apps to suspend trading. But some people could lose a lot of money if GameStop's share price plummets..
Vincent Flood (Vincent Flood), host of VideoWeek's ad market podcast, said Musk's tweets could «have devastating consequences for retail investors while he and his friends enrich themselves at the expense of little boys».
Former Google Employee Rich Plate (Rich Pleeth), an entrepreneur and investor based in London, agreed. He told CNBC that Musk could «get rich with one tweet».
«He's an innovator, but that doesn't mean he's above the law.», – said Plit.
but Max Levy (Max Levy), Head of Business Development for Nutmeg's Online Investment Management Application, said: «This has always happened in the capital markets», pointing to Warren Buffett and Ray Dalio as two other powerful figures in the context of their impact on asset values.
A few hours after it «Gamestonk!!», In his tweet, Musk wrote: «I kind of love Etsy», and subsequently, the stock of an online marketplace that focuses on handicrafts and antiques and materials rose 9%.
The U.S. Securities and Exchange Commission (SEC), 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 stocks via Twitter..
The New York Stock Exchange (NYSE) also declined to comment, and the big tech stock exchange Nasdaq and Musk's spokesman did not immediately respond to CNBC's request for comment..
Musk once faced problems from the SEC due to the fact that he tweeted about Tesla shares. In August 2018, he said that he wanted to make Tesla a private company by buying back the shares for $ 420 apiece, and that he had the funds to do so. Musk and Tesla had to pay the SEC a $ 20 million fine to settle the lawsuit, and Musk has since agreed to submit his public statements about Tesla's finances and other matters to her legal counsel for review. Last year, he sadly tweeted that Tesla stock «too high», which immediately led to a fall in the stock by more than 10%, although they recovered and continued to rise for one week.
While Musk's actions on Twitter this week have had a particularly strong impact on him, he has been changing stocks and cryptocurrencies for some time now. Earlier this month, Musk urged his 48.3 million subscribers to use the encrypted messaging app Signal, run by a nonprofit..
In an effort to support the company, investors rushed to buy up Signal shares, but many of them accidentally bought shares in a small component manufacturer Signal Advance, which resulted in its shares up 1,100%..
«Regulators don't just need to catch up, they need to proactively enforce regulations and explain what is acceptable», – said Lane of Freetrade. «And this also applies to shorts.».
Lane added: «The reality is that the new brand of charismatic leader now has a public platform, not just boardroom space. Regulators must decide how they handle this but ultimately bear the burden of updating the rulebook».
Hussein Kanji (Hussein Kanji), a London-based venture capitalist, told CNBC that he trusts the SEC for their work in keeping markets rational and fair.
«But Elon Musk, acting as the main influencer and stimulating demand in the regulated securities market, seems strange», – said Kanji. «If he was selling consumer goods, I would not raise an eyebrow.».
Stephen Bartlett (Steven Bartlett), founder of social media agency The Social Chain and investing in the tech sector, told CNBC that public markets now have influencers similar to those in fitness and beauty and health..
Musk has become a kind of star in public capital markets, Bartlett says, and the SEC can't do anything about it..