Daily Market Recap - Musk, the new Wall Street Oracle?

Billionaire Elon Musk became in early January the richest man in the world on paper thanks to Tesla's stock market boom. Buoyed by the success of his companies Tesla and SpaceX, as well as by the interest in electric cars and the rockets they make, he is considered by many fans as a visionary and his every word seems to have an effect on some investors.

When he changed his mini description text on Twitter to “#bitcoin” on Friday, the price of the cryptocurrency temporarily soared by about 20%. Mention of the Polish publisher of the video game CD Projekt, the online shopping platform Shopify or the small designer website Etsy, which apparently delighted Elon Musk with a hand-knitted hat for his dog, also boosted their share price.

The entrepreneur, who has a contempt for investors betting on falling shares, also got involved in the GameStop affair by tweeting a link to the WallStreetBets group on the Reddit forum, which contributed to the stock market boom of the video game specialist.

It's nothing new that the share price of some companies is being pushed by influential people,“ says Aswath Damodaran, professor of finance at New York University. The comments of banker John Pierpont Morgan more than 100 years ago or Chrysler boss Lee Iacocca in the 1980s were particularly watched. Businessman Warren Buffett's comments are still scrutinized by many investors, earning him the nickname ”the Oracle of Omaha, the city in Nebraska where he lives.

Elon Musk has, however, been able to “create a character of outlaw, outsider, who resonates very well with the male self of the Tech,” notes Christopher Smith, professor of communications at the University of Southern California. In a highly fragmented media world, he has mastered new technologies to “create excitement,” he adds.

However, his presence on Twitter has caused him some concern in the past. In 2018, the American stock market gendarme accused him of having misled investors by mentioning in a tweet a possible withdrawal of Tesla from the stock market. This message forced him to resign as chairman of the board of directors.

(Chart Source: Tradingview 03.02.2021)

No doubt aware of this power - and its possible legal consequences - the billionaire announced on Tuesday that he was taking a break from Twitter. “No more Twitter for a while,” he tweeted without further explanation. Could this be in relation to his role in egging on traders in the GameStop Saga？ No clue for now though given the personality of Elon Musk, he will likely return to the social media scene shortly.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.