Musk’s Twitter Bet Gins up Meme Stock Hype
As soon as Kyle Ash learned that Elon Musk had become the social media company’s largest stakeholder, he bought 2,000 pounds ($2,615) worth of Twitter Inc shares.
The 25-year-old shop worker from Reading, United Kingdom, invested in Twitter on Monday after news of Musk’s investment in the San Francisco-based firm soared 27 percent. On average, Ash paid $49 per share, compared to analysts’ $44 price objective for Twitter’s stock. The “meme” stock trading frenzy that has seized many private investors in the past 15 months has been characterized by bullish bets that go against Wall Street’s conventional knowledge.
Ash, who has also invested in meme stocks including video game retailer GameStop Corp and movie theatre operator AMC Entertainment Holdings, said he hoped celebrity billionaire Musk would inflate Twitter’s price to the same level.
“In the beginning, everything Elon touches causes a wave. I believe in people’s belief in him “”Ash stated.” According to data from Vanda Research, millions of investors flocked to Twitter’s stock after Musk, who has over 80 million Twitter followers, disclosed a 9.2 percent stake in the company, making it the most bought US stock by retail investors on Monday. On Monday, the stock saw the greatest inflow of $152 million out of all stocks and ETFs traded on US markets for the day.
Musk has amassed a devoted following of investors who have persevered with his business Tesla Inc for the better part of a decade, even as it struggled to streamline production and make electric cars affordable. With a market capitalization of more than $1 trillion, Tesla is currently one of the most valuable corporations in the world.
Musk, who is also the founder of SpaceX, a rocket company, is the world’s richest person, according to Forbes, with a net worth of $290 billion.
According to those familiar with the situation, Musk’s popularity among retail investors was one of the factors that led Twitter to offer him a position on its board of directors this week. Requests for response from Musk and Twitter were not returned.
Twitter’s stock has lagged behind its peers, despite the company’s efforts to increase advertising revenue and revenue from subscription goods. Before Musk revealed his position, the stock had dropped 38% in the year leading up to April 1, compared to a 13% growth in the S&P 500 Index.
According to Vanda, retail investors make up 9.9% of Twitter’s investment group. While this is higher than Tesla, which has a retail investor base of 1.5 percent, it is much lower than AMC, the most popular meme stock, which has a retail investor base of 40.9 percent.
“We expect the news to create strong retail investor interest in, and activity for, the stock, given Musk’s following on social and other media,” Bank of America Securities analyst Justin Post wrote in a research note this week. He warned, though, that the excitement could attract short-stock investors.