Internet rumors, like those triggered by Elon Musk's tweets, can cause sudden drops in stock prices

From Yahoo Finance: 2025-06-10 12:00:00

Stock prices can fluctuate rapidly due to news and rumors, impacting investors and traders. Internet rumors, like those triggered by Elon Musk’s tweets, can cause sudden drops in the stock market, affecting prices until the truth is revealed.

In 2013, a false tweet from the Associated Press about an explosion at the White House briefly caused panic in the stock market, leading to a 140-point drop in the Dow which quickly recovered after the truth was revealed.

In 2023, a fake AI-generated image of smoke billowing from the Pentagon circulated online, causing a temporary 0.3% drop in the S&P 500. The market recovered once the image was debunked, highlighting the impact of misinformation on stock prices.

Elon Musk’s announcements, like his plans to purchase Twitter in 2022, can have swift effects on stock prices. Musk’s decision to pause the Twitter deal caused an 18% drop in pre-market trading, and his subsequent attempts to back out led to further stock price declines.

Musk’s casual tweet in 2020 about Tesla’s stock price being too high caused a 10% drop in shares, only to see a quick recovery to nearly 20% higher by the end of the month. Musk’s social media posts continue to impact stock prices and investor sentiment.

Hertz’s 2021 announcement of ordering 100,000 Teslas for their rental fleet initially boosted stock prices. However, a subsequent post from Musk tempered the enthusiasm, showing how quickly stock prices can react to news and social media updates.

Read more: 6 Times Internet Rumors Caused the Stock Market To Plummet