6.5 C
New York
Saturday, October 23, 2021

The ‘Elon Musk effect’: how an error can multiply the value of a company by 130

Must Read

A new drug called “bombe” made from catalytic converters’ crushed honeycomb and pills is rattling authorities

The drug Bombe is made by smashing the ceramic honeycomb core of car catalytic converters, a device...

‘Dune’ Review: a sci-fi fantasy genre that won’t disappoint you

If you've read Frank Herbert's Dune series, you'll know what to come from Denis Villeneuve's CGI-heavy magnum...

Rare ‘rat king’ found alive in Estonia

After being discovered in Plva County, a unique 'rat king' was sent to the University of Tartu...
Aakash Molpariya
Aakash started in Nov 2018 as a writer at Revyuh.com. Since joining, as writer, he is mainly responsible for Software, Science, programming, system administration and the Technology ecosystem, but due to his versatility he is used for everything possible. He writes about topics ranging from AI to hardware to games, stands in front of and behind the camera, creates creative product images and much more. He is a trained IT systems engineer and has studied computer science. By the way, he is enthusiastic about his own small projects in game development, hardware-handicraft, digital art, gaming and music. Email: aakash (at) revyuh (dot) com

Before Reddit, the founder of Tesla had already shown the more ‘schizophrenic’ side of Wall Street. Just one tweet from Elon Musk is enough for some to invest in a product or service, even if it is not the right one

In recent days, an army of Reddit users, one of the largest platforms on the Internet, coordinated to expose the shame of Wall Street and end up showing their weaknesses with the ‘Gamestop file‘, probably one of the biggest ‘trolls’ of the history. But before thousands of anonymous people managed to breathe some vigor into stock market ‘zombies’ such as the aforementioned chain of video game stores or Blackberry, the world has already witnessed other ‘paranormal’ episodes in the global financial mecca.

A good example of this is what has been dubbed the ‘Elon Musk effect’. This has become known about the ability of the founder of Tesla and SpaceX to influence the valuation of different companies through a ‘tweet’, although on many occasions, he is even talking about completely different things and alien to the beneficiaries. His power is such that a few words from him, three specifically, managed to multiply the capitalization of a small company by 130.

The precedent of the Roomba

You may remember how almost four years ago all the alarms went off around the Roomba, the well-known and arch-emphasized robot vacuum cleaners, which now number in the hundreds of millions around the world. In an interview with Reuters, the CEO of iRobot, the company that manufactures them, assured that they were going to start “share its maps for free with customer consent to one or more of the Big Three in the next couple of years”. The stock market blessed the idea with a rise of more than twenty per cent. But the manager never really talked about marketing that data. It was a translation error that translated into billions.

This time it was not a translation error, but one of understanding Or simple coincidence. Last Sunday, January 31, Elon Musk announced on his Twitter, where he has more than 43 million ‘followers’ that he debuted at ClubHouse. You probably haven’t heard of it. It is the latest mutation of social networks, a platform where audio is the protagonist. The only content that one can post is live voice. Users open a room and begin to discuss the divine and the human, and their followers can enter to listen to them.

The platform, which is still in beta, has started allowing people from all over the world to enter through an invitation system, but until recently it was a kind of golf club where only heavyweights from Silicon Valley and other parts of the world could access Musk, by the way, spoke with Vlad Tenev, CEO of RobinHood, the ‘trading’ app used by ‘Reddit’ users for their skirmish. The businessman referred to him as “the stock impaler.”

Regardless of the content of the conversation, it seems that the simple presence of the millionaire in the social network has convinced many to put money in the ClubHouse titles were growing by over 40% after appearing on their timeline.

The problem? The social network is not listed on the Stock Market. It is a ‘startup’ that is still managed between rounds of investments and venture capital (a few days ago it reached the status of a unicorn, after exceeding 1,000 million valuations). What people were buying were shares in ClubHouse Media Group, as the Financial Times explained. It is a digital marketing company specialized in ‘influencers’ with more than 100 million followers worldwide. This firm, without any link to the social network, had to come to terms explaining that “they had no knowledge of where the upload came from.”

But much more exaggerated was the case of Signal. On January 7, he tweeted: “Use Signal”. The post came in the middle of a storm due to the change of conditions of use in WhatsApp, which would have forced users to share their data with their Facebook account if the controversy had not worsened so much, Mark Zuckerberg took a step back. And again, the magic. Thousands of people decided then investing in this encrypted messaging application was a profitable business. The problem again is that it is not a listed one. As the Twitter user ‘en_terror’ reported, what they were investing their capital in was Signal Advance.

It is a Texas-based business that markets technology solutions for industrial and medical purposes. Well, in 48 hours they saw their shares go from a minimum of $ 0.6 to touch a maximum of $ 78 in just two days. A madness that involved multiplying the value of the company by 130 in a couple of sessions, although they were later corrected. Dr Chris Hymel quickly came to the fore. “The initials of Signal Advance in the stock market, SIGL, are not related to Signal, the entity or platform to which Mr Musk refers. They are not related to each other,” he said. Hyrnel also took the opportunity to congratulate the ball that had hit the app “after this recommendation”.

But not all the increases have been the result of mistakes and confusion. Elon Musk played Cyberpunk 2077 last week. He assured that it was the first video game he played in his life and he did so with this CD Projekt title, immersed in controversy since its premiere due to the multiple failures that dragged the versions for PS4 and Xbox One. He narrated his positive impressions in a thread of three ‘tweets’. “The aesthetic of ‘Cyberpunk’ is incredible indeed,” he stated. In others, he said it was a great development despite the “hot patches”.

The result? A 20% rise in the company’s price that day, which has experienced a big drop due to this crisis. The personal fortune of Wojtek Radwanski, founder of the study, soared above 1,000 million. It was something momentary, the following day the market corrected its price again, practically returning it to the starting box. It’s not the first time Musk has winked at a video game. Bandai Namco, a Japanese studio, saw its stock price rise 4% shortly after Musk uploaded a meme made with one of the protagonists of ‘The Idolmaster’, one of its titles.

His influence is also noticeable in something as demanded as cryptocurrencies. It was enough that in his Twitter bio he put #bitcoin for the reference digital currency to advance rapidly in value. In a few minutes, the change went from just over $ 32,000 per bitcoin to almost 37,500. He has also worked the miracle with ‘Dogecoin’, a cryptocurrency that began as a result of a joke and has ended up being installed in the market as one more. A ‘tweet’ was enough for it to revalue 30% from $ 0.0039 to $ 0.0053.

- Advertisement -
- Advertisement -

Latest News

- Advertisement -

More Articles Like This

- Advertisement -