Earlier this month, Kim Kardashian West took to Twitter to lament an untimely death. Not a family member; all members of the Kardashian and Jenner clans are just fine. Kim’s meltdown was precipitated by the demise of her beloved Blackberry Bold. In 2014, Kim admitted to stockpiling Blackberry’s 2011 phone due to her love of the tactile keyboard. It seems that the phone is no longer available on EBay and it’s unlikely that Blackberry will be able to offer her a replacement. The company announced earlier this year that they would not be releasing a new version and would instead focus on Android phones.
The Oprah Effect
The bad news for Kardashian West turned into good news for investors in Blackberry when shares of BBRY traded slightly higher ($7.78) on the day of Kim’s meltdown.
Kardashian’s crisis may be the most recent, but certainly not the most profound, example of a celebrity influencing the stock market. In October of 2015, Oprah Winfrey announced that she was buying a 10% stake in Weight Watchers. The media mogul invested $43 million in new stock shares, crediting the points-counting diet company with finally providing her with a sensible way to manage her weight. After the announcement, investors saw the value of their stock increase 92% within a matter of days. By the end of November 2015, the stock was worth $27.76 per share, a 279% increase from its low point of $6.79 before Winfrey’s announcement.
When a Tweet effects Wall Street
Celebrity involvement with brands is nothing new. Celebrity endorsements influence everything from the music we listen to to the cars we drive so it’s not surprising that the effect would be the same for the stock market. Something as simple as a tweet from an influencer can affect stock prices, sending even newbie investors dipping into day trading. What can finance pros learn from these anecdotes?
Existing on social media is not optional in this day and age. It’s a requirement to legitimize yourself in the digital world, and could also give you a competitive advantage. If you’re using social media strictly to broadcast content, you’re missing out on a tremendous opportunity to build relationships and stay abreast of trends in the media and the stock market.
Last year, Forbes published a list of Twitter’s most followed celebrities. At the time, Katy Perry topped the list, with 71.4 million followers. Since then, she’s amassed an additional 20 million or so. Kim Kardashian West has a following half that size, at just 47.1 million. Involvement from influencers like these can cause investments to leap – for investors lucky enough to be holding those investments before that crucial tweet.
Get in the game
Finance pros may not be able to predict every market fluctuation perpetrated by celebrity influence on social media, but they can stay on top of trends to explain jumps and dips in the market – or predict when it’s reached a high point. In 2013, Daniel Gross writing for The Daily Beast suggested that when celebrities start talking stocks, it’s time to get out of the market. His proof? Another Kardashian tale.
In 2012, Kardashian retweeted an article about Apple becoming the most valuable company in history. Just weeks later, the stock began a 37% slide, effectively losing its spot as the most valuable company in history in a matter of weeks. Apparently, celebrity product endorsements = good. Celebrity stock advice = disaster.
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