Prof. Dr. Stefan Ouma, holder of the Chair of Economic Geography at the University of Bayreuth, his colleague Tobias Klinge, and Dr. Reijer Hendrikse from the Department of Geography, Cosmopolis Centre for Urban Research at Vrije Universiteit Brussel, have conducted a comprehensive and intertwined analysis of the rapid and highly volatile stock market development of Tesla shares since its IPO in 2010. Their analysis took a close look at both macro and micro dynamics that have shaped the financial market development of the company.
"Our intertwined analysis shows that these successes are not merely due to the entrepreneurial innovation often attributed to Elon Musk personally. Nor is the commercial success of the company sufficient to explain these fluctuations," says Ouma. The influencing factors, according to the researchers, include narratives cultivated in social media, a loyal following, the rise of new trading platforms for retail customers, and the hype around Tesla's inclusion in index funds. "All this has contributed to the stock developing what we call a 'momentum'," explains Ouma. This dynamic was also fueled by an exceptionally high trading volume of Tesla-related financial derivatives.
This study emphasizes the importance of a comprehensive analysis that goes beyond usual financial metrics and includes factors such as social media, the narrative dimension of financial markets, politico-economic contexts, and specific constellations in corporate governance, which are characteristic of many tech companies.
For the researchers, Tesla is a typical example of increasingly technology-driven financialized capitalism, where bets on future price developments of technology stocks are more influential than ever on the companies' current paths. "Speculation plays a bigger role than economic performance. This in turn leads to massive wealth gains and sometimes political power for certain groups of investors and owners," Ouma notes. A side effect, according to the researchers, is that the resulting stock market boom not only stabilized Tesla's finances since 2019 but also allowed Elon Musk to increase his private wealth through a special compensation package, becoming the richest person in the world. Ouma explains, "We call this benefiting 'Capitalizing on Conjunctures'. This finding puts narratives that focus solely on the creative-destructive power of a single entrepreneurial personality in a very different light."
