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Tesla shares fall to the red in 2021 after sharp decline in bitcoin

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Analysts say Teslas stock price has significant links to Reddit posts

More On: tesla Lucid Motors SPAC stock tanks after Tesla rival inks deal to go public Tesla stock falls further after Elon Musk loses $15B in single day Elon Musk’s latest Dogecoin tweet sparks flurry of speculation Tesla has made $1B on Bitcoin — but Elon Musk says price looks ‘high’

Tesla might be the biggest meme stock of them all.

The electric-car maker’s stock price appears strongly connected to how many people are talking about it on Reddit’s WallStreetBets forum, Barclays analysts say.

After scraping data from the foul-mouthed message board behind the recent GameStop frenzy, the bank’s researchers found a “statistically significant” relationship between the number of posts about Tesla and its performance on the market.

“We have painfully learned that social media memes can matter more for TSLA share performance than actual financial metrics, fundamentals or (dare we say) valuation,” Barclays analysts led by Ryan Preclaw and Brian Johnson wrote in a research note this week.

Tesla shares tended to outperform the S&P 500 one or two days after big upticks in WallStreetBets submissions about the stock, the analysts found.

Tesla also had positive returns in the days leading up to 20 spikes in Reddit posts about the stock over the past five years, meaning “the statistical significance does not seem caused by only a single event,” the researchers said.

“In the model we think is most appropriate, a swing up of 7 or more submissions today over yesterday has been predictive of outsized returns in TSLA stock tomorrow,” the Barclays team wrote in its Tuesday note.

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But the findings came with some caveats. The analysts only examined WallStreetBets posts that mentioned Tesla’s ticker symbol without referencing any other stocks. There also might not be enough data to make a rock-solid link between Reddit chatter and Tesla’s movement, according to the note.

“The situation has been so dynamic that there are simply too few examples to be confident of a stable process between WSB posts and TSLA returns,” the analysts wrote. “Even more than usual, past results might not predict future performance.”

Tesla shares tumbled as much as 6.3 percent to $695 on Thursday after Bloomberg News reported that the Elon Musk-led automaker had halted some production of its Model 3 sedan at its California plant for about two weeks.

The stock came under pressure earlier this week amid a drop in the price of bitcoin, which Tesla added to its balance sheet last month.

Filed under barclays ,  elon muskreddit ,  stocks ,  tesla ,  2/25/21

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