Today the world – and particularly Wall Street – got a masterclass in the power of a few well placed words, when a single tweet by Tesla (and SpaceX) CEO Elon Musk cause the electric car maker’s stock to jump nearly 4 percent in just 10 minutes – adding a staggering R12 billion to the company’s market cap in just 115 characters.
What new information did Musk share to have such impact? The tweet was light on details, but heavy on hype and anticipation – just the kind of commentary that the SEC tends to frown upon.
Major new Tesla product line — not a car — will be unveiled at our Hawthorne Design Studio on Thurs 8pm, April 30
— Elon Musk (@elonmusk) March 30, 2015
The tweet may have initially gone out to Musk’s 1.86 million followers, but the impact was far greater. By the end of the day, Musk’s message had been retweeted more than 4,700 times and favorited another 3,700, while eliciting thousands more responses. (Maybe Twitter CEO Dick Costolo should send Musk an invoice for the IR/PR services.)
It was nearly two years ago to the day (April 2, 2013) that the SEC cleared Netflix CEO Reed Hastings of violating Regulation Fair Disclosure when publishing previously undisclosed company information to Facebook. In the process, the financial regulator opened up the proverbial floodgates to corporate executives and major shareholders – like activist investor Carl Icahn – to use social media to disseminate material information related to their companies and investments. The pertinent bits of that decision read:
The Securities and Exchange Commission today issued a report that makes clear that companies can use social media outlets like Facebook and Twitter to announce key information in compliance with Regulation Fair Disclosure (Regulation FD) so long as investors have been alerted about which social media will be used to disseminate such information.
Not surprisingly, there has been plenty of speculation about what Tesla could have in store for next month’s product launch. If it’s not a car, what could it be? The most common guess I saw during a cursory Twitter search is that Tesla will reveal its long anticipated home battery. Others have stayed within the (non-car) vehicle arena, guessing Tesla may be cooking up an electric motorcycle or even a helicopter or airplane. I even saw a few predictions of a Tesla smartwatch, and several (obviously sarcastic) bets that a real world Ironman suit is on the way.
Whatever April 30 brings in terms of Tesla’s product portfolio, Wall Street has effectively decided that it’s worth nearly a billion dollars in enterprise value. Of course, any savvy stock investor will tell you that the value of public stocks bears little correlation to the actual underlying value of a business. Rather, they’re more a reflection of emotion and company (and market) momentum – two things Musk thoroughly stoked with today’s non-announcement.
Musk has no doubt earned more confidence (and cult-like adoration) than most corporate executives, meaning that whatever he has up his sleeve, Wall Street and Main Street alike seem sure that it will be a hit. He is, after all, the man who took on Detroit (not to mention German and Tokyo) and NASA. Oh, and there was also that promise to extend human life to Mars, not to mention the futuristic Hyperloop transport system that will make LA to San Francisco a half-hour trip.
There may not be too many other execs that could drive the kind of instant stock rally as Musk by doing little more than circle a date on the calendar. Steve Jobs had that power in his later years, and his successor Tim Cook likely does too (though the clockwork of Apple’s product launch timeline has begun to dull much of this prior impact). But that’s about where the list ends.
– Michael Carney (PandoDaily)