Every time President Donald Trump tweets negatively about a company, the media focuses on the business’s reaction and speculates about the future of its stock performance. Investors brace themselves for a possible decrease in market value.
However, according to analysis by Student Loan Hero on the impact of Trump’s tweets on stock prices, those investors might be worrying over nothing.
President Trump on Twitter
According to The Wall Street Journal, the stock market has experienced significant increases since Trump was elected in November. Stocks are up by a staggering 20 percent.
Although the Trump administration would likely love to take credit for this increase, many factors contribute to stock market prices, and we’ve been experiencing a yearslong bull market since before his election.
However, Trump’s use of social media is unprecedented for a president, and many people worry about how his posts could affect stock prices. In fact, big-name companies across the nation have designated teams with the sole job of monitoring Trump’s tweets and preparing a response plan.
How valid are those fears about Trump’s tweets? To find out, Student Loan Hero examined the stock prices of nine companies after Trump tweeted about them.
The analysis, which studied companies such as Amazon, Nordstrom, and Toyota, showed that executives and investors shouldn’t worry. The companies did see a slight decrease on average in the first 24 hours after the tweets went public. However, the stock prices quickly recovered — and in some cases, even improved.
In the first 24 hours, four of the nine companies saw a decrease, while the other five either stayed the same or slightly increased. The companies’ stock prices dropped by $0.19 on average. Within one month of the tweets, the businesses saw an average increase of $4.55. Within two months of the tweet, they improved by $2.44 overall.
Amazon saw the most significant increase. While it dipped in the first 24 hours, its stock price went on to increase by 3.62 percent. (Amazon’s data wasn’t included in the two-month calculation, as that information wasn’t available at the time of writing.)
Below, you’ll find the circumstances behind the tweets as well as how the companies fared.
1. Rexnord Corp.
In 2016, Rexnord Corp. notified the steelworkers union in Indianapolis that it would be moving operations overseas, leaving 300 people without jobs. Trump tweeted about it months later, after “NBC Nightly News” aired a segment about the company’s move.
Rexnord of Indiana is moving to Mexico and rather viciously firing all of its 300 workers. This is happening all over our country. No more!
— Donald J. Trump (@realDonaldTrump) December 3, 2016
Rexnord Corp. saw only a nominal drop in the 24 hours after Trump’s tweet. Within two months, its stock price recovered and even slightly increased.
President Trump’s daughter Ivanka’s fashion line was sold at Nordstrom stores nationwide and online. However, many consumers petitioned Nordstrom to drop the line because of the controversy surrounding her father.
In February 2017, the retailer announced it would no longer sell Ivanka’s products because of low sales. Trump took to Twitter to express his displeasure over the decision.
My daughter Ivanka has been treated so unfairly by @Nordstrom. She is a great person — always pushing me to do the right thing! Terrible!
— Donald J. Trump (@realDonaldTrump) February 8, 2017
The next day, Nordstrom’s stock price rose by over $1. Two months later, it dipped by the barest margin.
Since his campaign, Trump has spoken out against many major automakers, including Toyota, for moving operations outside the United States.
When Toyota’s president announced that it was building a new plant in Mexico, he took to Twitter to blast the company.
Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for U.S. NO WAY! Build plant in U.S. or pay big border tax.
— Donald J. Trump (@realDonaldTrump) January 5, 2017
Within one month, Toyota’s stock price dropped by over $5. Within two months, its decline continued. Although Trump’s tweet might have had a direct impact, the car company also has been struggling with lackluster sales over the past few years.
Shortly after the election, Trump tweeted criticism about the cost of a new Air Force One. The Government Accountability Office said the cost could be over $4 billion by the time the company delivered the plane.
Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!
— Donald J. Trump (@realDonaldTrump) December 6, 2016
However, Boeing saw little to no blowback from Trump’s statements. Instead, after 24 hours, the stock price rose and continued to increase over the following months.
In November, President Trump announced that he had worked with Carrier, a heating and air-conditioning company, to keep its factory jobs in Indiana.
Big day on Thursday for Indiana and the great workers of that wonderful state.We will keep our companies and jobs in the U.S. Thanks Carrier
— Donald J. Trump (@realDonaldTrump) November 30, 2016
Carrier representatives released a statement that said Trump had offered tax incentives in exchange for the company keeping its business stateside.
Despite the good news and positive tone of Trump’s tweet, Carrier’s stock price dipped slightly. It fluctuated over the next two months but was stagnant overall.
In the spring, Ford outlined its plans for development in the United States, including the investment of over $1 billion in its Michigan plants. Trump tweeted about the news, declaring it a major win for jobs.
Just got a call from my friend Bill Ford, Chairman of Ford, who advised me that he will be keeping the Lincoln plant in Kentucky – no Mexico
— Donald J. Trump (@realDonaldTrump) November 18, 2016
The automaker experienced a slight dip after the tweet and then saw an increase of less than $1. Ford has had significant issues lately, including a 42 percent decrease of its adjusted earnings in the first quarter of 2017.
7. Lockheed Martin
In December, President Trump decried defense company Lockheed Martin on Twitter for its cost and budget overruns.
Based on the tremendous cost and cost overruns of the Lockheed Martin F-35, I have asked Boeing to price-out a comparable F-18 Super Hornet!
— Donald J. Trump (@realDonaldTrump) December 22, 2016
Immediately afterward, its stock price went down. However, its share price went up by $12 within two months of the tweet.
8. General Motors
General Motors, another car company, also drew President Trump’s ire. He tweeted that it made a model of the Chevy Cruze in Mexico and sold it in the United States tax-free.
General Motors is sending Mexican made model of Chevy Cruze to U.S. car dealers-tax free across border. Make in U.S.A.or pay big border tax!
— Donald J. Trump (@realDonaldTrump) January 3, 2017
General Motors responded with a statement that said most Chevy Cruzes are built in the United States and only a small number are made in Mexico.
Despite the negative tweet, General Motors’ stock price saw an increase and was even higher two months later.
President Trump has tweeted about Amazon multiple times, focusing on the company’s impact on local retailers and jobs.
Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt – many jobs being lost!
— Donald J. Trump (@realDonaldTrump) August 16, 2017
Amazon’s structure is uncommon and controversial, as the company pays taxes on only a portion of the sales made through the site. Politicians on both sides of the aisle have spoken out about uncollected tax dollars from the e-commerce giant.
After Trump’s tweet, Amazon’s stock prices went down by about 1 percent in the first 24 hours. However, the company’s stock price rallied by over $35 in just one month.
Are Trump’s tweets good for investors?
In all cases, regardless of whether Trump’s tweets were positive or negative, the changes in company stock prices were nominal.
While most companies did see an increase on average, the increase can’t be attributed solely to Trump’s mentions on Twitter. His tweets also can’t be blamed for overall decreases.
Instead, it appears the stock market fluctuated naturally based on the economy and company updates. The general trend of the market was an upward climb, so it makes sense that the companies mentioned in Trump’s tweets would increase too.
Stock prices are based on supply and demand. When buyers are interested in a stock, such as when a company announces a new product or increases revenue, the price goes up. When a company has bad news, such as layoffs, the price goes down.
Economic conditions, such as a recession, can cause significant decreases across the board, as can major world events, such as threats from other countries. That means Donald Trump’s tweets are only a tiny factor affecting stock prices.
What you should do with your investments
As a new investor with credit card or student loan debt and a tight budget, seeing your stock choices dip can be frightening.
When President Trump mentions a company you invest in, you might even be tempted to sell right away and recoup some of your money. However, trying to time the market and selling whenever there’s a decrease is how investors end up losing money.
Instead, focus on investing over the long-term to increase your chances of success. The market continually cycles, and some companies can have months of dips. But over time, the stock’s performance can overcome those gains and trend upward.
Invest what you can afford, stay consistent, and hold on to stocks through the occasional ebbs and flows. By hanging in there, you could end up making more money over time.
Methodology: To analyze the impact of the president’s tweets on stock prices, Student Loan Hero examined shares of nine different companies mentioned by Trump using Google Finance. It focused on businesses named by Trump on Twitter after the election only. It reviewed their prices the day of the tweets, 24 hours afterward, one month later, and two months after the posts.
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