ADVES CEO opens up a can of worms over how social media influencers are seriously affecting companies, large and small
Crisis PR & Communication expert and commentator Marina Evseeva, ADVES CEO, writes about popular social media sites which are changing the way companies are share valued by often mischievous pundits, often with disastrous results, in her blog at Finextra.
Read how US video games company GameStop became entrapped in a boom and then almost bust lifecycle, having to close more than 400 of its retail outlets in the US in 2020 after comments in the WallStreetBets section on Reddit.
Also, when the irrepressible Elon Musk literally had a dog day with popular handicrafts and gifts site Etsy after buying his pooch a wool hat from them and then microblogging about it on Twitter. He raved about how he liked the company so much, and almost immediately, the shares of the online store rose by 11% — to almost $232.4 per share, before crashing back down to earth again.
Such is the power of social media postings like these that it’s causing unpredictable upswings in share prices and prompting concern among professional financiers and analysts. Michael Burry, the renowned US financier — yes, that man who blew the whistle on the US real estate bubble in 2008 and predicted the global financial crisis which followed — has said: “What is happening now must have legal and regulatory implications. It’s unnatural, insane and dangerous.” His comments are echoed by Dan Lane, an analyst at UK-based trading app Freetrade.
Dan launched a full-scale verbal attack on the wily Musk with: “There’s a strange irony in Elon Musk’s ability to influence market movements and at the same time to criticise the practice of short selling which, in his opinion, is unnatural [for the market]. It may be time to discuss the legality of this practice.”
Dan added that regulators should start to be more proactive. In his opinion, the authorities need to pass new laws and clarify what actions of opinion leaders of the financial market in social networks are acceptable from the point of view of legislation.
A direct link to Marina’s blog is https://www.finextra.com/blogposting/20574/how-social-media-influencers-are-ruling-top-business-investments