Moving Markets: How Much Could a Single Post on Twitter Be Worth?

Trick question.

It is not so much the value of the tweet itself that matters, but what the user of the tweet hopes to accomplish by employing that platform to achieve their own ends.

What adept users of Twitter have learned to do, as the following article explains, is create a reality distortion field. The network effect extends and prolongs the impact of whatever the message may be. Carl Icahn and other financiers are learning to use Twitter and other social media in the way they once attempted to use business TV and print media to, as the Wall Street saying goes, 'talk their book.' In other words, to try to convince others to respond to information in ways that would benefit the investments they hold in businesses or securities which comprise their so-called book of business.

Whether it is financial or political or organizational or emotional, the ability to manipulate the medium to achieve one's end is what determines the value of the tweet, just as it once did so for a newspaper article or a tv news story. JL

David Carr reports in the New York Times:

How much could a single post on Twitter be worth?

How about $1 billion? Or maybe $6 billion? If the post comes from the fingertips of Carl C. Icahn, the hyperactive hedge fund manager, an argument could be made that there’s gold in those 140 characters.

We’ll unpack that value chain in a minute. First let’s stipulate that unless you are a day trader, much of the business news right now is boring. There is very little deal flow, the mergers of old are gone and, give or take the occasional Twitter initial public offering or a government shutdown, there isn’t much to talk about — unless a Libor scandal or quantitative easing get your blood flowing.

That means the ink and attention go to the straw stirrers, the agitators, the outliers who make business news and numbers jump off the page and the screen. There’s a reason that the frantic Jim Cramer endures on CNBC.

It’s also why Mr. Icahn, a 77-year-old with a net worth of $20 billion, when sending out a post or three about Apple, can make big news. He can still shake things up and move the market, enabled by the incredible reach of social media like Twitter or the ample exposure from a TV channel like CNBC.

Here’s the chronology. Back in August, Mr. Icahn announced in two separate posts that he was buying Apple stock and that he planned to push for large payouts to investors.

As Fortune magazine pointed out, within an hour of his posts on Twitter, Apple’s market capitalization increased by $17 billion.

Then last Monday night, Mr. Icahn had dinner with Tim Cook, the chief executive of Apple, and on Tuesday morning he posted the following:

“Had a cordial dinner with Tim last night. We pushed hard for a 150 billion buyback. We decided to continue dialogue in about three weeks.”

Then he picked up the megaphone at CNBC on Tuesday, suggesting again that Apple needed to borrow $150 billion to finance a buyback. It is an outrageous request, a historic amount of debt for a company that has a historic amount of cash on hand. Apple, of all companies, doesn’t need the money.

“I feel very strongly about this,” Mr. Icahn said on CNBC’s “Fast Money.” “I can’t promise you the stock will go up and I can’t promise you they will do the buyback. But I can promise you that I’m not going away until they hear a lot more from me concerning this."

By the close of trading on Tuesday night, Apple’s market capitalization had increased by $1 billion, to $443 billion, with a big bump after Mr. Icahn’s Twitter post and his comments on CNBC.

That’s $18 billion for three posts, or an average of $6 billion a post, give or take a few bucks for the impact of the CNBC appearance.

Maybe Mr. Cook should have dinner with Mr. Icahn more often.

Even though Mr. Icahn is not even among Apple’s 20 largest shareholders — with what has been estimated at $2 billion in holdings, he owns about 0.5 percent of the company — people listen to him.

That’s because while Mr. Icahn may be an old dog, he has some new tricks, including using strategic posts to stir the pot. Twitter has been a godsend for Mr. Icahn — he has 90,000 followers — in part because it has no filter, and neither does he. And for CNBC, handing Mr. Icahn the microphone is a no-brainer even though his notions about Apple are far-fetched. In general, CNBC has to put on all manner of anodyne executives who are in the business of saying nothing about everything.

People and news organizations pay attention to Mr. Icahn because companies that ignore him — see Motorola and Yahoo — do so at their peril. Never mind that Mr. Icahn would probably not know an iPhone from a Galaxy S4. In a market-driven world, the stock price is everything. And the only thing. He doesn’t own shares in a company called Apple. He owns a stock listing called AAPL.

He is akin to everyone’s crazy uncle whom no one should listen to, except everyone does, and he often turns out to be right. He wins in part because he knows the outside play — the media game — so well. Using business news outlets and now social media, Mr. Icahn is able to make corporate boards quake and chief executives tremble because they know he will say anything, and he often does.

Mr. Icahn usually zeros in on troubled companies, but in this case he is cynically suggesting that one of the most successful companies in the world — one that has already announced plans for $100 billion in dividends and buybacks — should borrow $150 billion and go into real, actual debt despite having $147 billion in cash on hand. (Most of Apple’s cash is overseas and cannot be used to buy off investors.)

Apple probably won’t take the Twitter bait. The company has replaced Coke as the most recognizable brand in the world, with a steady string of product hits. Does it really need Mr. Icahn’s advice?

Many serious people believe the company has too much cash on hand, but Apple is a deliberate, careful company and will not suddenly adjust its managing strategy to accommodate someone’s need for lucrative short-term returns.

Mr. Cook is an unfailingly polite person who probably saw no harm in telling Mr. Icahn as much face-to-face. But the perception of having a dinner conversation that is promptly posted on social media is not great. After all, if Mr. Icahn has Mr. Cook’s ear, shouldn’t other people pay attention to him?

“Every day somebody, somewhere, is saying that something would not happen at Apple if Steve Jobs were alive, and 99 percent of the time it is not true,” said John Gruber, whose blog, Daring Fireball, is closely followed on all things Apple. “But in this instance, that thinking would be right. Steve Jobs does not have dinner with Carl Icahn.”

Then again, if Mr. Icahn were to dine on some crow in regard to Apple — or more likely, settle for some small portion of what he wanted — he would probably be just as public about that. On Friday, he used his Twitter account to surrender in his fight with Dell, saying he had “better uses for $2 billion.” But by having his hands on both the levers of social and legacy media, Mr. Icahn has been able to create, as Mr. Jobs was known to do, a kind of reality distortion field.

Given that Mr. Icahn has, over the course of three posts, goosed almost $18 billion in market value for Apple, no wonder people are drooling over the Twitter I.P.O. Turns out that in the right hands, Twitter can be a magical wealth-creation machine powered mostly by hot air.