Impact of Twitter on Stock Market Performance: Evidence from Elon Musk and Tesla

Abstract

In the last decade, rising social media impact along with technological progress has given the potential for higher "democratization" of public voice. However, influential individuals, with hundreds of millions followers got the possibility to shape the public opinion and create herding behavior. Twitter activities, especially with financial markets-related content are gaining popularity as well. In that regard, the purpose of the paper is to analyze correlation between Elon Musk's Twitter activities and stock price performance of Tesla company, by using different models of sentiment analysis. Rapid Automatic Keyword Extraction tool was used in Phyton. Correlation analysis was done for the 3-year time period (Oct 2019-Oct 2022) in order to capture heightened volatility and various systematic risks, which had resulted in even more tweeting activities. Results showed that there is mid to high correlation between Elon Musk's tweets and share price of Tesla.