Social media is growing up and news that breaks on Twitter is now news that moves the markets. Real tweets have the power cause political tension, end careers and find a kidney. Fake tweets can have the same effects, and damage control is difficult. There is no way to edit or add a correction to a tweet, and once it has been re-tweeted, those 140 characters take on a life of their own. You’re probably thinking, “My clients aren't on twitter and it's all pointless information being tweeted.” FALSE. People listen to what’s broadcasted on twitter. Last year, two armed men forced a victim into the trunk of his car. The hijackers weren’t aware that the victim still had his cell phone on him and the man sent a text message alerting his girlfriend. Once she received the text, she tweeted
“Be on the look for DSS041GP, My boyfriend has just been hijacked and is in the boot please RT.
People began to circulate the message, which was seen by the user @PigSpotter, who has a following of more than 100,000 followers. @PigSpotter updated followers on the story as it progressed. In less than two hours, the hijackers hit a roadblock and abandoned the car and its owner. Do you still believe people don’t listen on twitter?? In this week’s blog I invite you to sit back, relax and learn that when twitter speaks, the people, the market, and the world listens. #1 The Associated Press twitter hack Could 140 characters be all it takes to turn the economy on its head? As most of us know, last week The Associated Press’ twitter account got hacked sending out a tweet that suggested a fake bombing. This tweet caused The Dow to drop 143 points and although the market quickly rebounded after the Associated Press announced the account had been hacked and the tweet was false, it was a wake up call for investors. #2 Netflix CEO and The SEC Last summer, Netflix CEO Reed Hastings posted on Facebook that Netflix customers were viewing more than 1 billion hours of video content a month. The posting was widely
reported and Netflix stock rose 13% the day of the posting.As a result, Netflix was hit with a Wells Notice, which meant it could face action from the SEC. After examining Hasting’s decision to announce a corporate milestone on his personal Facebook page last year, the SEC advised that it’s only fair to share important information through social media if a company has told investors where to look for it.
#3 Doug Kass and Apple Hedge fund manager Doug Kass affected Apple's stock when he sent a tweet one day before the company's shareholder meeting stating that Apple might announce a stock split. Quickly following the tweet, Apple shares rose 1.2 percent to $448.04. Kass later tweeted that he was selling off some of his “outsized position” as the “rumor seems to be baseless.” #4 Chipotle Jeffrey Gundlach, a professional investor and founder and CEO of Doubleline Capital does not like Chipotle. “Gourmet burrito is an oxymoron,” he shared at a luncheon he hosted in New York City. The restaurant's stock dipped more than 2% after Gundlach's comments. #5 Muddy Waters and Audience Audience, a mobile-audio and voice-processing company, saw a big drop in its stock price after a false report surfaced on Twitter that the company was being investigated for fraud. Its stock price went down from 12 to 8.87 in about two minutes before Muddy Waters later sent a real tweet: “There is NO report. This is a hoax. MW does not know this company.” Helping the stock price quickly recover. So what is the moral of all of these stories? When people tweet, not only does the world listen, but the world reacts, and that world includes investors. The Twitter-sphere is no longer home to simple, “pointless” information. It can become the biggest impetus behind what your clients do with their money. There is often talk about the power of words, and when it comes to the financial world, 140 characters maybe the strongest weapon you have.