: How can Elon Musk's tweet bring down Tesla's share price? Musk tweeted that Tesla's shares price was too high and suddenly it went down

Vote Up Vote Down   0 Reactions

Login to give Reaction!

Lots of investors saw the tweet and either believed that Musk knew something they didn't which would cause the stock price to fall in the future (i.e. the company's profits or growth were unlikely to hit their targets) or believed that lots of other investors would believe that and sell. In either case, that caused a large number of people to want to sell and to be relatively unconcerned about the price they were getting (most sellers were placing unconditional market orders to sell).

When there is a large increase in the number of people trying to sell, stock prices fall. The people on the buy sides of the trades need to get lower prices in order to offset the risk that either Musk does know something or that the market was going to drive the price even lower leaving them with a loss. Thus, the price dropped until there were enough buyers that thought they were getting a big enough bargain to be worth the risk they were taking.