A Word on Social Media Could Get Your Stock Rising or Falling
Perfecting stock trading also involves keeping your eyes and ears open for almost all kinds of news, not just market news. That's because anything that happens in the global scene could affect stocks. Even an incident that appears remotely connected to finance could play a crucial role in the market.
This is the age of hyper connectivity, not just in terms of transportation but also information. A tweet or an Instagram post could have more serious consequences than the person ever intended, particularly if the individual is a celebrity or the part of the senior management of a company.
How It all Started
Elon Musk realized that when he chose to get involved in the rescue mission of the Thai kids trapped in a cave in the forests of Thailand. The rescue effort involved many countries, and Musk had a tool in hand - a tiny submarine large enough to accommodate a child. The submarine has oxygen that can be fed into it, and is light enough for two divers to carry it. Being small, it can also go through narrow gaps.
Controversy over Musk's Tiny Submarine
Musk tested the device in the United States and claimed to have designed it based on recommendations from the Thai navy and army who were among the prime groups involved in the rescue efforts. However, one of the cavers and another member of the rescue mission openly denied that it could be used in the Thai caves owing to their tight confines. But Musk claimed to have tested it for use in such conditions. One argument led to another and finally culminated in one of the British cavers involved in the rescue mission, Vernon Unsworth, aggressively opposing Musk's idea publicly with some pretty harsh phrases that could be termed offending.
Musk didn't take it lightly, which was understandable, and called Unsworth a "pedo", which he intended to refer to "pedophile". While Musk was widely criticized for using the term, including Unsworth himself who threatened legal action, the tangible damage was done to Tesla ($TSLA) stock. Musk later apologized for his choice of words.
Musk's Provoked Tweet Affects Tesla Shares
On Monday, the 16th of July 2018, Tesla shares fell by more than 3.5% in response to Musk's tweet to Unsworth. What investors felt was that Musk was getting too distracted by other endeavors, compromising on fulfilling the production targets of Tesla's Model 3, the mass market electric car whose production deadlines Musk is already struggling to achieve. The Model 3 is considered the integral element that will ensure profitability for the company since this is an affordably priced model that will bring in the volumes. And for that, the company must meet the Model 3's production targets. With this stock sell-off, nearly $2 billion of the company's market value was knocked off.
Twitter is a platform Musk uses to express his opinions, announce strategic decisions, and even criticize unfavorable media reports. But this caver submarine incident should be the catalyst for a more measured approach towards social media by Musk.
Keeping tabs on the market and its ebbs and flows is essential to make the right moves in stock trading. TradeZero helps you do that with its advanced trading software. Call us at +1 954-944-3885. You can also email us at firstname.lastname@example.org.
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