A set of economists believe that stock markets are efficient… which means
that taking into account all available information about the company, the stock price of that company at any point in time is believed to be fair.
Basically, stock prices are always correct. This mind sound crazy, but
again, it's just a theory and no theory is always entirely true.
But the opponents of the efficient market frequently bring up examples to show how and why the stock markets might not be completely efficient. Let's
look at one such example that happened recently.
Elon Musk, the richest man in the world, recently tweeted that he recommends using Signal as an instant messaging app – instead of the incumbent WhatsApp. This was on account of WhatsApp updating its Privacy
Policy. Now look, Elon has about 40 million followers on Twitter. When he says something, people listen. So yeah, Signal – the messaging app – saw a
rise in downloads with over 1 lakh downloads in just 2 days.
But something else happened too… and that was weird.
So the stock price of Signal Advance - an entirely unrelated Texas-based
technology company which works on healthcare and industrial applications –
surged. The shares surged from 60 cents, before Musk's tweet on January 7,
to $8.30 on Friday – a surge of more than 1100%! Such is the weirdness of the stock market!
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