From announcing his ambitious plan to build a cyborg dragon, to telling the world that he would take Tesla private at $420 a share – a reference to cannabis culture – Elon Musk’s Twitter feed offers plenty of amusement. But for Tesla shareholders, the wrong meme, joke or outburst can cost millions in lost value.
The $420 tweet saw the United States’ Security and Exchange Commision (SEC) ban Musk from tweeting about Tesla without first gaining approval due to the “significant confusion and disruption in the market for Tesla’s stock and resulting harm to investors” that it caused.
However, while Tesla is off limits, Musk’s Twitter feed is no less entertaining, unusual and at times erratic since then.
In 2019, Musk has used the platform to argue with the San Francisco’s Bay Area Rapid Transit system over tunnels and more recently lend his support to the first “openly goth” presidential candidate.
How do Elon Musk’s Tweets impact the Tesla stock price?
In order to track how Musk’s tweets impact the Tesla stock price, car repair comparison website WhoCanFixMyCar has created a handy tracker that compares sentiment for Musk against Tesla stock every 30 minutes.
The tracker works by pulling data from Twitter and search engine Bing and feeding it into an algorithm that can determine whether references to Musk on social media and in the news are positive or negative using more than 3,000 reference words. The word “profit”, for example, would suggest the comment is positive, while “rant” would suggest the opposite.
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The algorithm then uses this information to calculate a media sentiment score and a Twitter sentiment score.
The tool compares these figures alongside Tesla’s stock fluctuation every 30 minutes, revealing when there is a correlation between change in sentiment and fluctuation in the Tesla stock price.
The tracker shows that, while changes in media sentiment (which appear frequent) seemingly has little impact on Tesla stock, Twitter sentiment is closely tied to the electric vehicle company’s performance. Between May and July this year, for example, Twitter sentiment consistently reflected Tesla stock.
However, when changes did occur, these changes often inversely mirrored each other. According to WhoCanFixMyCar, this is likely due to Twitter users taking Musk’s actions lightly, while shareholders were less likely to see the funny side.