Celebrity stocks and portfolios

What are celebrity stocks?

Celebrity stocks are the companies whose share prices are influenced by famous individuals – be it actors, well-known CEOs or lauded investors. While having a famous investor in no way guarantees returns, celebrity stocks are an interesting phenomenon.

Over the years there have been numerous examples of celebrities having a direct impact on the price of companies. When celebrities make negative remarks about a brand, there are instances where the company has lost billions as a direct result. But equally, when a famous face makes an investment into a firm, or sings its praises, the company’s shares have seen a major uptick.

Here are some famous examples of celebrities influencing stocks:

1. Cristiano Ronaldo and Coco-Cola shares
2. Kylie Jenner and Snapchat shares
3. Elon Musk, Tesla shares, Bitcoin and Dogecoin
4. Dave Portnoy and SafeMoon
5. Donald Trump, the S&P 500 and Boeing shares
6. Oprah Winfrey, Weight Watchers shares and Oatly shares
7. Jessica Alba and The Honest Company shares

Cristiano Ronaldo and Coca-Cola shares

On June 14 2021, amid the UEFA Euro competition, Cristiano Ronaldo made his feelings about the tournament’s sponsors – Coca-Cola – clear during a press conference. Despite being in a Coca-Cola advert in the nineties, Ronaldo pushed two bottles of Coca-Cola that sat on the table away from him and picked up a bottle of water instead.

The gesture had a huge negative impact on the company. When the market opened at 3pm (ET), Coca-Cola shares were trading at $55.60 and when the ‘Cristiano moment’ happened 30 minutes later, the shares fell to $52.22 each. This 1.6% drop caused Coca-Cola to lose a total of $4 billion from its market capitalisation – taking it from $242 billion to $238 billion.

A week later, on June 21, shares of Coca-Cola were still falling and ended the day at $53.97. At that valuation, the total market cap of the company was $234.38 billion.

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Kylie Jenner and Snapchat shares

In February 2018, Kylie Jenner single-handedly wiped $1.3 billion off of Snap’s market capitalisation – the company behind Snapchat – after she tweeted that she no longer used the social platform.

"Sooo does anyone else not open Snapchat anymore?" she asked her Twitter followers. "Or is it just me... ugh this is so sad." Her tweet was shared over 66,900 times and liked by more than 327,600 people.

Even though Jenner quickly followed her initial tweet with another saying how much she loved the app, it took until June 2020 for the share price to reach the same level it had pre-Jenner’s tweet.

While Jenner’s tweets were not the only factor at play here, her popularity among the app’s users definitely marked the start of the decline. A lot of users were unhappy with Snapchat’s recent redesign, and so it’s likely Jenner just vocalised what a lot of other people were thinking.

That wasn’t the end for Snapchat though. The company did eventually rebound, and its shares were trading above $65 as of June 22 2021 – over 200% more than they were at the time of Jenner’s tweet.

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Elon Musk, Tesla shares, Bitcoin and Dogecoin

Elon Musk is fairly well known for his market moving opinions, so we’ll just take a look at those that have had the largest impact.   

First, Tesla. Musk wiped nearly $14 billion off the value of his own company in May 2020 after tweeting that its share price was ‘too high’. This caused Musk’s stake in Tesla to fall in value by $3 billion.

Up next, is Musk’s continuing relationship with Bitcoin. In February 2021, Musk announced that Tesla had bought $1.5 billion in Bitcoin to enable the company to facilitate payments in the cryptocurrency. But in May, Musk announced Tesla would no longer accept Bitcoin payments due to the environmental costs. This caused Bitcoin’s value to fall by more than 10%. Musk confirmed on June 21 that Tesla would resume allowing transactions made in the digital currency once crypto mining becomes greener – this announcement caused Bitcoin to hit a three-week high, climbing back above $40,000.

Another cryptocurrency experienced gains thanks to Musk’s support, the meme crypto Dogecoin. The price of the coin has risen from just fractions of a cent up to around $0.30 thanks to Musk’s announcement that he plans to put ‘a literal dogecoin on the literal moon’. Musk as also previously said he’s ‘working with doge devs to improve system transaction efficiency’. Despite saying his comments on dogecoin shouldn’t be taken seriously, he helped the coin hit a total market capitalisation of over $70 billion in May 2021.

Due to Musk’s significant influence over financial markets, there have been calls for his Tweets to be regulated.

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Dave Portnoy and SafeMoon

Dave Portnoy, known as the founder of Barstool Sports’, found himself at a loose end following the cancellation of most major sporting events during Covid-19. As a result, he stopped sports betting, and started day trading.

The controversial Portnoy now live streams his trades to over 2 million Twitter followers, calling himself ‘Davey Day Trader Global’. His only caveat to his fans: I’m not a professional, don’t trust me. But that hasn’t stopped any of them from taking Portnoy’s advice and jumping head first into his stock choices.

While some of Portnoy’s trades have been profitable, namely his positions on cruises and airlines, it’s his attitude toward meme stocks and cryptocurrencies that have gained the most attention. In fact, Pornoy is one of the founders of the BUZZ ETF, a fund that holds the most talked about stocks across social media sites.

In a tweet made on May 17 2021, Portnoy said he’d ‘chosen a side’ in the crypto market, and would be buying $40,000 in SafeMoon, the latest so-called meme asset. Portnoy stated he wanted to do what Elon Musk has done and become a ‘leader’ – despite telling others that he wasn’t an expert.

SafeMoon’s market cap was trading at $4.5 billion at 8pm, but following Portnoy’s tweet at around 8:50, the coin’s value increased by 20%, taking the crypto’s market cap above $5 billion. In the month since, SafeMoon value has fallen, down to a market cap of $1.5 billion on June 22, 2021. 

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Donald Trump, the S&P 500 and Boeing shares

While all US Presidents have a history of impacting the stock market, none have done so through Donald Trump’s favourite medium: Twitter.

Although Trump is now blocked from the platform, throughout his presidency, Trump regularly tweeted about companies or the US stock market as a whole, and the results were often incredible periods of uncertainty for investors. A report by Barron’s in 2019 found that on the days Trump tweeted more than 20 times, the S&P 500 fell by an average of 0.03%.¹

Trump exploited this influence when he wanted to as well. One such incident was when Trump tweeted about Boeing in December 2016, stating that the company’s costs for a new Air Force One commission were ‘out of control’ and that he was going to cancel the order. This caused Boeing stock to tumble by $2 per share and saw the company’s market capitalisation to fall by $1 billion.

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Oprah Winfrey, Weight Watchers shares and Oatly shares  

Oprah Winfrey, famous chat show host, is quite the investor and business woman. She owns her own entertainment company (Harpo) and has stakes in global brands such as True Food Kitchen and Apeel Sciences.

Her most influential acquisitions have been minority stakes in the weight loss program Weight Watchers – now known as WW – and vegan milk company Oatly.

Winfrey first partnered with WW in 2015, buying 6.4 million shares, for approximately $34 million. Following her investment, the company’s shares increased in value by 450%, and as of 2020 her investment was worth $430 million. Although she’s now sold some of her investment, she still holds 5.4 million shares which is around 8% of the company.

More recently, Winfrey – as part of Blackstone Group – bought a 10% stake in Oatly for $200 million. When Oatly went public in May 2021, it raised $1.4 billion. Winfrey was one of a number of celebrity backers of Oatly, others included Natalie Portman and Jay Z. While Winfrey’s involvement definitely made headlines, it didn’t necessarily help the company to hit its goal – which was a $2 billion valuation.

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Jessica Alba and The Honest Co shares

Jessica Alba – the actress best known for her roles in the Fantastic Four and Dark Angel – founded The Honest Company in 2011.

Alba created the enterprise after the birth of her first child, when the family’s experience of allergies and asthma led to Alba seeking alternative baby products with non-toxic, eco-friendly perks.

In Alba’s own words: ‘I founded The Honest Company on this idea: Everything that touches you and your family – everything in your home – needs to be nontoxic, needs to be effective and beautiful to look at, and needs to be affordable.’

Despite not being profitable, and the company not expecting to pay dividends in the near future, the Honest Company raised $412.8 million in its 2021 IPO, valuing it at $1.44 billion. A lot of people have credited Alba’s fame with the popularity of the company.

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Should we be watching celebrity stocks?

Much in the same way as the retail investor following threads on Reddit to see which stocks to invest in, we’re starting to see trackers emerge that look at the portfolios of famous individuals. But, basing your strategy on celebrity investments is risky business for two reasons:

1. They’re not professionals. Following the advice of anyone – let alone celebrities – without doing your own due diligence and analysis is always going to come with higher risk. As Dave Portnoy himself says, he’s not an expert, don’t trust him. You’ll be much better off looking at the analysis of professionals, and supplementing that with these trendier investments
2. They have significant capital. Celebrities usually have a lot more financial backing, so large losses make a smaller dent in their overall balance than it would the account balance of a retail trader. When you utilise the same strategy as a celebrity investor, just remember to do so using your own risk-reward ratio and never put up more than you can afford to lose

¹Barron’s, 2019