Tesla CEO Elon Musk’s words can move millions of people and billions of dollars. He should be aware of this at the latest since he triggered a brief slump in his own company with the statement in May 2020 that, in his opinion, the share price was too high. This year, when he called for the Messaging service Signal to be used, he made millions of new downloads of the app – as well as a multiplication of the price at a listed company with a similar name. And slowly the Tesla boss seems to like it: On Tuesday (after the stock market close) he poured further fuel on the fire on a share that has been out of control for some time.
Tesla boss with stock memes
On Tuesday evening, a single word from Musk, with his 43 million followers on Twitter, was enough to push the stock of Gamestop, a chain of electronics and games stores from the United States, up an additional 42 percent after the hours. It had already gained around 93 percent in regular retail and has increased almost tenfold since the beginning of the year. Although Gamestop’s market capitalization is only a comparatively modest 10 billion dollars, the stock was the most traded on US stock exchanges on Tuesday, even ahead of Tesla itself.
“Gamestonk !!”, the Tesla boss commented on the highest daily win at Gamestop to date. In doing so, he showed his attachment to the occasionally silly Twitter community, which has gotten into the habit of referring to stocks as “stonks” instead of correctly as “stocks”. Musk also posted a link to the website where Gamestop is most likely to be responsible for the wild ride: the wallstreetbets sub-forum on Reddit, where private investors search for the next hot stock and occasionally arrange to meet up with joint purchases to drift.
This works particularly well with companies whose shares were previously sold intensively short because other investors are betting on falling prices: If purchases then begin without real news, the short sellers can be caught off guard and have to buy the borrowed and pre-sold shares at the current price buy back to limit their loss. This effect can reinforce itself, which can lead to developments like the last one at Gamestop, especially since retailers who are purely short-term oriented like to jump on clear trends and thus reinforce them, whether up or down.
Musk mocks negative speculators
Wallstreetbets is therefore often looking for stocks with a high short or short share. While this practice is not illegal, it is unpopular in some circles because short sellers are trying to make money off other people’s misfortunes, so to speak. Musk himself had to struggle with it for a long time, because Tesla, with its uncertain future prospects and serious problems in the meantime, was a frequent target for negative speculators. During this time, he got used to criticizing short sellers – and since Tesla’s plans seem to be increasingly working and the stock has risen and risen, he has mocked them. That should also explain why Musk poured more oil into the already brightly blazing short fire at Gamestop on Tuesday.