We already know that celebrities have a huge impact on our lives. From social media to the daily news to ad campaigns, we see the presence of stars everywhere. Now, what if I told you that on top of all the influential power that celebrities have, they could also control the stock market? Ok ok, it is a bit of an exaggeration, but recent events have shown us that companies acquiring star-studded power has an immense effect on their share prices.
Yeezy, Yeezy, Yeezy
Yes, of course the market reacts to good news by driving up demand and increasing share price. Yes, good news is of course good for the company. However, isn’t it just almost incredible that popular figureheads have so much power, even in the world of finance? Take for example, Kanye’s very very recent (Friday, in fact) signing with Gap, which is a 10-year deal that would introduce the line “Yeezy Gap” beginning in the first half of 2021. The share price of Gap jumped as much as 42% as a result of the announcement of the intended collaboration. Funny thing is, Gap isn’t exactly a stock that investor’s have praised. It has seen sales decline the past years, and the company is looking to redefine its place. Of course, we all know that signing Kanye West can do wonders for your clothing brand, as the hype around his image and clothing line can generate billions from just retail sales (not to mention the huge hype in the secondary aftermarket, often known as the “resale” market). It’s no surprise that any company would want to sign a designer giant like Kanye, as the projected revenue far outweighs the signing costs.
Spotify getting into it
If we want to look even a bit further into the past, just a bit, we can remember when Spotify signed Joe Rogan signed a $100 million deal with Spotify which allowed the Joe Rogan podcasts to be streamed and accessed exclusively on the Spotify platform. That day, Spotify closed 8% higher. Again, this was a case where the company believed that by signing a major artist, they’d benefit from the added client traffic which would possibly result in subscriptions.
So if you look at it, the easiest way to instantly increase the share price of your company would be to sign a major name.
It isn’t that easy though. Of course your company would need the necessary capital to recruit such a talent, along with the proper data and projections that would indicate signing a high caliber artist would be worth it. However, what if I told you that you didn’t even need to sign a major name, and that you could have in-house talent shoot up your share price?
Although not necessarily the typical “entertainment” person, Elon Musk is definitely a name that both investors and the average person would know. From his many antics, like smoking weed with Joe Rogan and giving his newborn quite a umm unique name, Elon is quite the character. Playing a similar role as a Kanye West or a Joe Rogan, Elon Musk is the figure for Tesla and his charm along with endorsement of his company plays much the same role as a celebrity. In a post on twitter, Musk was quoted to say “tesla stock price is too high” which sent the share price into freefall mode. Of course, Elon is more directly correlated to the inner operations of his company than celebrities with their endorsements, but the general concept is the same. A popular figure has the power to shift a stock price up or down. Scary? Not really. It might not be fair that a celebrity can talk trash about a company without any evidence, and then the company crashes, but it makes sense when a celebrity signs and works with a company with a resultant share price gain. For the most part, CEO’s aren’t stupid, and companies have gone through the proper evaluations as to whether or not to bring an individual on board, and so when they sign a big fish, you can be sure that they're cooking something good.