Elon Musk’s not-so-secret weapon: an army of bots on Twitter

In early November 2013, the news for Tesla was not good. A number of reports have documented cases of Tesla Model S sedans catching fire, causing the electric car maker’s share price to drop.

Then, on the evening of 11 Nov. 7, within 75 minutes, eight automated Twitter accounts came to life and began posting positive comments about Tesla. Over the next seven years, they will post over 30,000 of these tweets.

More than 500 million tweets are sent across the network every day, which is a drop in the ocean. But preliminary research from David A. Kirschprofessor at the Robert H. Smith School of Business at the University of Maryland, concludes that this kind of activity by so-called bots played a significant role in the “share of the future” narrative that propelled Tesla’s market value to higher heights. than can justify any traditional financial analysis.

In a market in love with “meme stocks,” sex storytelling is proving far more lucrative than financial analysis, said Kirsch, co-author of “Bubbles and crashes: the boom and bust of technological innovation”.

“Tesla’s story is extraordinarily powerful,” Kirsch said. Despite the company facing bankruptcy several times, the vision of a planet-saving and world-dominating commercial enterprise has allowed CEO Elon Musk to “continue to sell shares to the public to keep them going. At some point it really becomes self-fulfilling.”

The question of whether Twitter bots are programmed to deliberately manipulate stock trading is one of the questions Kirsch and his researcher Moshen Chowdhury are trying to answer.

Their request came as Musk signaled intent to use his wealth and giant Twitter following to influence the future direction and policies of the platform. After buying a nearly 10% stake in Twitter last month, Musk announced he would join the board, but Twitter said on Monday that he had changed his mind for unspecified reasons. Musk is a Twitter phenomenon, constantly posting tweets to his 80 million followers that range from standard to outrageous, from juvenile to obscene.

In 2018, he settled fraud charges with the U.S. Securities and Exchange Commission for allegedly defrauding investors into believing he had a deal to privatize Tesla when he didn’t. Now he is trying to annul this agreement in court.

A Twitter bot is a fake account programmed to search social media for certain messages or news content – such as Musk’s messages – and respond to them with appropriate pre-programmed tweets: “Great long-term upside” or “Why Tesla stock is up.” today” or “Tesla’s delivery miss was ‘meaningless’.” Bots can also be programmed to send nasty or threatening messages to critics of the company.

Kirsch and Chowdhury collected and analyzed Tesla-related tweets from 2010, when the company went public, until the end of 2020.

During this period, Tesla lost its accumulated $5.7 billion, despite the fact that its shares skyrocketed, and Musk became one of the richest people on the planet; his fortune is estimated at 275 billion dollars. Operating results can’t justify anything close to a $1 trillion market value of a company based on any conventional stock price measure.

Emails to Tesla and a tweet from Musk asking for comment on the story went unanswered.

Using a program called Botometer, which social media researchers use to distinguish bot accounts from human accounts, the pair found that a fifth of Tesla tweets were generated by bots. This is not in conflict with giants like Amazon and Apple, but their bots tended to promote the stock market and tech stocks in general, with those companies as leaders, but not focus on any particular story about the companies.

While no direct link between bot tweets and stock prices has yet been established, the researchers found enough smoke to keep their project going.

Over the 10-year study period, of the approximately 1.4 million tweets from the top 400 accounts posting on the $TSLA cashtag, 10% were generated by bots. The study found that out of 157,000 tweets posted with the hashtag #TSLA, 23% were from bots.

Kirsch and Chowdhury tracked 186 Tesla-related bot accounts and found that the company’s stock rose more than 2% after launching each. (They looked at the average stock returns the week before the bot was created and the week after.) While Tesla’s market value has risen over the years, the price has experienced sharp ups and downs. The periods associated with the creation of bots increased dramatically, Chowdhury said, but outside of these periods, trading was much more volatile.

“It’s not a causal relationship, but it raises questions,” Kirsch said, “why there is a correlation that doesn’t seem to be random. “We are trying to understand the mechanism. It can’t just be a bunch of stock-pushing tweets. People need to notice them, interpret them and act on them.”

Researchers look at the timing of tweets and options activity in the overnight stock market, among other factors. One big unknown: whether the bots are the work of organizations with a direct financial interest in Tesla.

The researchers found that Twitter bots were created on behalf of other companies, but the content was typically what they called “generic” marketing messages.

Whatever the impact on stock prices, Kirsch says the bot campaign represents a new form of corporate content distribution or, as he calls it, “computer-assisted computational propaganda.”

“This computational content may have shielded the Tesla narrative from a new group of critics, eased downward pressure on Tesla’s share price, and boosted pro-Tesla sentiment from the firm’s June 2010 IPO through the end of 2020,” the report said. a paper that the researchers plan to present at the International Symposium on Electric Vehicles in June in Oslo.

The newspaper calls Musk “an exceptional figure on Twitter” with 80 million followers. “It is unclear whether this strategy can be replicated by other firms,” the authors write.

If so, legal and ethical issues will become more important. Are firms using bots required to report their use to the Securities and Exchange Commission or comply with lobbying disclosure rules?

These are questions that Kirsch believes regulators will need to consider as other firms see how much Musk and Tesla have benefited from their bots.

“It is important who is standing in the square and holding a big megaphone in their hands, and juice with which they can amplify their statements,” he said.