Recently, several messages from influencers have directly impacted the share prices of various companies. Admittedly, this phenomenon is not totally new, especially on Twitter, but its expansion to other social networks and its frequency raise the question of the power of influencers. We take a look at these recent events as well as the role of influencer marketing in the financial sector.
Twitter and the financial markets
We can’t talk about Twitter without mentioning a certain White House tenant and Twitter addict. Donald Trump, despite being president of the United States, continues to actively use the microblogging network with cuff reactions and attacks. Last 29 March, Amazon was once again targeted – the animosity between CEO Jeff Bezos and the president is known. The impact was immediate as the e-commerce giant’s stock plummeted in New York as a result of the tweet.
I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!
— Donald J. Trump (@realDonaldTrump) March 29, 2018
But it was also the charismatic boss of Tesla, Elon Musk who made the markets react following several tweets. It all started when WhatsApp co-founder Brian Acton called for people to delete Facebook following the Cambridge Analytica scandal – which we spoke about in a previous article. Elon Musk responded, it seems, with a touch of humour but turned words into action by removing Tesla Motors and SpaceX’s Facebook accounts. The hashtag #deletefacebook had ramifications, seriously accentuating the fall of the already troubled Facebook stock.
Tesla Goes Bankrupt
Palo Alto, California, April 1, 2018 — Despite intense efforts to raise money, including a last-ditch mass sale of Easter Eggs, we are sad to report that Tesla has gone completely and totally bankrupt. So bankrupt, you can't believe it.
— Elon Musk (@elonmusk) April 1, 2018
A few days later, Elon Musk struck again: he wanted to play an April fool’s joke on his 21 millions followers by announcing his company Tesla’s bankruptcy. However, given that the firm’s results had being disappointing for several months, the tweet caused a share price fall of more than 7% on Wall Street. Musk’s humour wasn’t really appreciated by the financial markets!
Lastly, we can mention Oprah Winfrey’s tweets, which had positively influenced French company SEB’s share price and more recently that of Weight Watchers. Twitter has long been a space where rumours and information on the financial markets circulate. Since 2012, the symbol $ or cashtag has made it possible, by associating it with the name of a business, to find all the financial information of the corresponding company. In addition, tools using financial forecasting algorithms based on the analysis of social networks are being developed. In this regard, we can mention iSentium or the European start-up SESAMM.
The growing power of influencers
Other social networks are not being left out as Instagram and YouTube have also become influential channels for the financial world. To prove the point, take signer Rihanna’s Instagram story last 16 March where she criticised an offensive ad on Snapchat. Snap Inc. stock consequently tumbled more than 4%. The firm suffered from a lack of HTML brand safety. Before that, the American star Kylie Jenner had already caused a stir, indicating her discontent following the redesign of the app. It’s mostly companies whose business model relies heavily on the number of users, as with most apps, that are the most vulnerable.
Social networks are also important for cryptocurrency rates which are particularly volatile, we discussed this in a previous article on the topic. In France, early this year, the starlet Nabilla recommended investing in Bitcoin on a YouTube video, provoking a reaction from the French financial market regulator. Beyond the anecdote, the case illustrates the awareness of markets and financial regulators of the power and role of influencers, who can have a strong and direct impact on a company’s share price or investment by individuals, and who must therefore be prudent and responsible.
Influencer marketing is not confined to fashion or culture but also impacts stock markets. Companies must be responsive and, with an eye on their e-reputation, carry out social media monitoring, since nowadays a simple message on Twitter, Instagram or YouTube can change a company’s value.