Elon Musk, Social Media and the SEC: The changing dynamics of corporate messaging
It all started with a message from Tesla CEO Elon Musk:
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
According to the SEC, this could qualify as securities fraud as “false and misleading” information. He allegedly did not know for sure that the funding had been secured but sent the post anyways, causing Tesla stocks to see-saw for weeks. The SEC announcement, made Thursday, September 27, immediately set off an explosion of responses across all media platforms, with major news organizations leading the way.
News of the SEC lawsuit negatively affected Tesla’s stock prices, which in turn became news to be shared on social media. Overall, negative sentiment towards the brand increased from 3 percent to 33 percent.
We are only beginning to explore the possibilities and implications of social media platforms that let everyone, corporate executives included, directly communicate with a large audience. This has led to some unexpected discoveries about what social media can do, changing the way we think about them as communication tools. Social messages having legal repercussions is one such new step.
This is part of a larger trend of a dynamic and unpredictable media environment, involving the increasingly multifaceted nature of messages sent by corporations, the globalization of their stakeholders, the rapid evolution of technology and the consequent convergence of corporate communications and marketing. Elon Musk has shown how isolating corporate executives and their social presence from the corporate communications strategy can have disastrous consequences for brand health and reputation.