Analysis-Musk’s Twitter bet sparks meme hype

The 25-year-old retail worker, from Reading, Britain, bought shares of Twitter on Monday after shares jumped 27% following news of Musk’s investment in the company based in San Francisco.

Ash paid $49 per share on average, versus analysts covering Twitter’s stock price target of $44. Bullish betting that flies in the face of conventional Wall Exchange wisdom has been a feature of the “same” stock trading frenzy that has swept through many individual investors over the past 15 months.

Ash, who has also invested in such stocks as video game retailer GameStop Corp and movie theater operator AMC Entertainment Holdings, said he hopes famed billionaire Musk will bring the same excitement to the stock. Twitter. “Everything Elon touches creates a wave at first. I have faith in people’s faith in him,” Mr Ash said.

Millions of investors flocked to the Twitter stock after Musk, who has more than 80 million Twitter followers, revealed a 9.2% stake in the company, making it the US stock most bought by retail investors on Monday, according to data from Vanda Research. The $152 million inflow into the stock on Monday was the largest of any stock and ETF on US exchanges for the day.

Musk has developed a loyal following of investors who have stuck with his company Tesla Inc. for most of the past decade, when it was still struggling to streamline the production of electric cars and make them affordable.

Tesla is now among the most valuable companies in the world, with a market cap of over $1 trillion.

Musk, who is also the originator of other companies such as rocket maker SpaceX, is the richest person in the world with a net worth valued by Forbes at $290 billion.

Musk’s popularity with retail investors is one reason Twitter this week agreed to offer him a seat on its board, according to people familiar with the matter.

Musk and Twitter did not respond to requests for comment.

Shares of Twitter fell against their peers amid the company’s efforts to make its advertising more lucrative and generate more revenue from subscription products. The stock fell 38% in the 12 months to April 1, before Musk disclosed his stake, against a 13% rise in the S&P 500 index.

Retail investors make up 9.9% of Twitter’s investor base, according to Vanda. While that number is higher than Tesla, where retail investors make up 1.5%, it is significantly lower than even the most popular stock, AMC, where retail investors make up 40.9% of the retail base. investors.

“Given Musk’s popularity on social and other media, we expect the news to generate significant retail investor interest in the stock, as well as activity for it,” said Bank of America Securities analyst Justin Post in a research bond this week. He warned that the hype could also attract investors who like to short stocks.


By investing in Twitter, Musk is borrowing a page from the playbook of AMC and GameStop, whose executives have also capitalized on their popularity with retail investors to place bets on other companies.

Last month, AMC disclosed a $27.9 million investment in struggling gold and silver miner Hycroft Mining Holding Corp. Retail investors have followed, and shares of Hycroft are now trading seven times their value a month ago.

An investment by GameStop chairman Ryan Cohen in retailer Bed Bath & Beyond last month led to a doubling of the company’s stock market value.

Some analysts have warned that the rise in Twitter stock based on the hype may not be enough to sustain retail investor interest.

Musk’s long-term contribution to Twitter will depend on his ability to make the company more profitable, CFRA Research analyst Angelo Zino wrote in a statement this week.

“The goal is to better monetize the platform, and we believe Musk can only help, not hurt the process, his recent criticism of the company being a refreshing sign,” Zino wrote.

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