Does anyone remember the old (very old) E.F. Hutton commercials—"When E.F. Hutton talks everyone listens." Well, the updated version of that should be "When Elon Musk tweets, the stock market reacts." Recently, the Tesla and SpaceX chief sent out a 61 character long tweet and POOF! he was suddenly $1.4 billion richer.
The tweet was about taking Tesla private at $420 a share. But even bigger is the fact that he claims to have secured the funding to do so.
Now most companies would stop trading of their stock before releasing such big news that is of critical importance to their shareholders. Furthermore, this sort of announcement is usually made in a regulatory filing. However, we live in a brave new world where all previous protocol does not seem to matter, and important news is revealed on a social media platform.
Needless to say, Musk's tweet sent the price of Tesla's stock through the roof.
Shares were already on the rise upon the news that Saudi Arabia's investment fund had acquired a $2 billion stake in Tesla. Musk's tweet added fuel to the fire and put Tesla's shares within reach of their all time high. At the end of that trading day, Tesla stock was up 11% to $379.57 per share. That bump initially translated to a $1.4 billion increase in Musk's paper net worth. Musk is Tesla's largest individual shareholder with 20% of the company.
Unfortunately, the good times for Tesla stock did not last. As the market discovered Musk's funding was not secured, the stock gave back most of those gains.
As of this writing can Tesla isn't trading at $305 per share. The stock dropped 9% on Friday alone on the heels of an embarrassing article in the New York Times that showed Musk as unhinged and possibly in need of replacement.