Elon Musk Joins GameStop Melee With More Jabs at Short Sellers

“Here come the shorty apologists. Give them no respect. Get Shorty,” Mr. Musk tweeted Thursday to his more than 40 million followers.

On Wednesday, GameStop shares more than doubled after Mr. Musk tweeted “Gamestonk!!” the previous afternoon, linking to the popular Reddit forum WallStreetBets. Stonk is a play on the word “stock.”

Mr. Musk has used Twitter to cultivate a devoted following of Tesla fans, benefiting from the kind of retail investor fandom that has propelled the stocks of GameStop and others such as AMC Entertainment Holdings Inc. AMC 53.65%

Mr. Musk has long courted retail investors, not just on Twitter. Unlike most companies, Tesla lets retail investors pose questions on quarterly earnings calls before institutional investors. On the Reddit forum, he has earned the nickname Papa Elon among some fans for his pronouncements.

Shares in Tesla soared more than 600% in the 12 months ended Thursday, transforming the Silicon Valley company into the world’s most valuable auto maker and, as of earlier this month, making Mr. Musk the world’s wealthiest individual, according to the Bloomberg Billionaires Index.

For years as Tesla struggled to stem losses, Mr. Musk used Twitter to attack short sellers, firing off posts that often were followed by a jump in Tesla’s stock price that hurt shorts in the process. As Tesla’s stock has soared, he has gloated about the financial damage it has inflicted on those that bet against the electric-vehicle maker.

A mere mention by Mr. Musk on Twitter can send a company’s shares soaring.

Early Tuesday, Mr. Musk said he liked online shopping site Etsy Inc., where he said he had bought a wool Marvin the Martian cap for his dog. The stock rose more than 8% on the open. Cryptocurrency bitcoin gained roughly 18% early Friday after Mr. Musk, a longtime fan of the digital currency, gave it a renewed endorsement. Shares in CD Projekt SA, the maker of the troubled Cyberpunk 2077 game, rose more than 15% Thursday after Mr. Musk gave the game a shout-out.

Mr. Musk’s social-media habits have landed him in trouble, too. The Securities and Exchange Commission took issue with tweets he made in 2018 saying that he had secured funding to take Tesla private. Mr. Musk and the SEC later settled with a deal intended to limit his Twitter use, though the businessman has since used the platform to mock the regulator.

His messaging also has landed him in court. A British spelunker sued Mr. Musk, accusing him of defamation in connection with a 2018 tweet. A jury sided with the Tesla boss, who had deleted the offending tweet and later apologized.

Those actions have done little to calm Mr. Musk’s twitter activity, and especially when it involves going after short sellers. Last year, Mr. Musk promoted a line of red satin “short shorts” that Tesla started selling; their backsides referenced the company’s vehicle models, spelling out S-3-X-Y. In a tweet this week, he said: “Shorting is a scam.”

The share gains Mr. Musk can bequeath can be instantaneous, but just as fleeting. Etsy’s stock closed lower Tuesday. And, shares in the Cyberpunk game designer on Friday more than gave back their prior-day gains. GameStop’s stock fell roughly 44% Thursday.

Murillo Campello, a Cornell University finance professor, said that although it isn’t unusual for people with sway on Wall Street to weigh in on companies publicly, Mr. Musk’s approach to doing so can be concerning.

“It really does create distortions,” Mr. Campello said. Tesla didn’t immediately respond to a request for comment.

Mr. Musk’s tweets, at times, have gone against Tesla’s own investors. Last year he tweeted that he thought the company’s share price was too high. The market agreed, and the stock fell before recovering.

And even as Mr. Musk talked up outside investments, Tesla’s shares declined roughly 8% after the company reported fourth-quarter earnings Wednesday that fell short of Wall Street expectations.

For Tesla, which doesn’t splash out on car ads like many rivals, Mr. Musk’s social-media presence can be a valuable commodity, said Jonah Berger, a marketing professor at the University of Pennsylvania’s Wharton School. “We’re talking about Tesla right now, and he got us to talk about him for free,” Mr. Berger said.

Write to Rebecca Elliott at [email protected]