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50 Cent Plugs Stock to 3.8 Million Followers on Twitter, Stock Soars

This article was written by in Investing. 17 comments.


Here’s a fun experiment. You don’t need many materials, just a little bit of work. Here are the steps: Create a huge following on Twitter. Put your money into a little-known stock with low trading value. Write several messages on Twitter to almost 4 million followers about how good the investment is. Watch the valuation of the company, one that is best known for late-night infomercials selling the George Foreman Grill, soar by $50 million.

Then sell.

Rapper 50 Cent didn’t sell to lock in the incredible rise his shares experienced on paper, but if he had, it could have been a great endorsement deal. He spent the weekend writing about a new headphone product that he, along with the master late-night marketers, introduced at the Consumer Electronics Show. He probably wouldn’t have been able to sell his investment in an illiquid investment like the penny stock representing the company, HNHI. Eventually, 50 mentioned the investment might not be right for everyone. Eventually — and certainly not immediately — he disclosed his ownership in the company.

He is obviously using his popularity to benefit him financially in the stock market, and there’s little difference between this and the penny stock pump-and-dump scams. You could argue that all that a popular musician does is trade popularity for merchandise sales — but with music, you generally know the product before you buy. With an investment like this, only a small portion of the investors who took action based on Twitter messages bothered to do any independent research into the company. If they had, they might have found financial problems — or perhaps they did discover that the company experienced losses and is borrowing money from its CEO, but decided to ignore the negatives in light of the fact of the celebrity endorsement and involvement.

The entertainment industry is a huge influence on the consuming public. Styles worn by celebrities go viral the next day. Red Bull thrived because they paid Britney Spears or Paris Hilton to be photographed with the drink. Let’s try to leave entertainers to entertaining; forget about getting investment advice from them.

Observer
Photo: flattop341

Published or updated January 10, 2011. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 17 comments… read them below or add one }

avatar brianahasmoney ♦367 (Nickel)

That’s (slightly) genius of him! I don’t know if those were his motives, besides just having people buy his merchandise, but whatever’s clever. If only I could have the same effect haha

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avatar Will @ HackingTheBank.com

He better hold onto the stock for a while so he doesn’t face any regulatory issues.

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avatar tbork84 ♦1,867 (Half-Dollar)

It seems to me that he did dump the stock near term there would be an investigation. I can only imagine the headlines now.

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avatar JWizzle

Man, oh man.

Nothing is better than the volume explosion:
Volume: 8,994,785
Avg Vol (3m): 26,645

Nice work, Fiddy!

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avatar DIY Investor

After some fools get wiped out because they stupidly invested heavily in some celebrity twittered stock they’ll run crying to the government for tax payers to bail them out. We’ve seen all this before. Please people try once to do your own thinking – it feels good!

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avatar nimrodel ♦42 (Newbie)

I can’t believe people would invest based on the advice of some celebrity. Ugh, people.

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avatar Bobka ♦13 (Newbie)

So true! People have been investing on bad advice forever. Would you like to buy a bridge in Brooklyn or some Florida swampland? As P.T. Barnum said, “There is a sucker born every minute”.

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avatar gotr31 ♦224 (Cent)

If you are dumb enough to blindly follow a celebrity and dump your money into some unkown investment then you get what you deserve!!!

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avatar TakeitEZ ♦549 (Dime)

Fifty did what was best for him and his finances and you can’t fault him for that. Now the other individuals who invested without doing research are another story.

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avatar Janet

I love 50 cent & I’m definitely a fan of his music, but I wouldn’t think that his audience is that into investments … to the point where his fans make their mark on the stock exchange. Who knew. :)

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avatar Cruxman ♦331 (Nickel)

I’m going to have to go with consensus here and say if you fallow investment advice from 50 cent and actually invest you get what you got coming. The general public it seems are just a bunch of media programed robots doing what ever they are feed! It’s a shame.

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avatar skylog ♦368 (Nickel)

this is the kind of story that you read, and you have to wonder if it is april fools day. then, you shake your head and realize this is the world we live in.

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avatar tigernicole86 ♦55 (Newbie)

It’s definitely unethical but not illegal. And while I’m a music fan, really? Really, people?

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avatar Investor Junkie

Gives new meaning to Fiddy Cent’s name in hustling penny stocks. It’s get rich or get investigated by the SEC for trying.

This is as bad as listening to Mr. T on advice for gold (I’m not making this up as he was on Bloomberg a few months back)

http://www.youtube.com/watch?v=pWAu7FmKbYc

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avatar Msjbelle ♦126 (Cent)

I don’t think what he did was a problem. If people choose to buy it they choose to buy it. If they follow him they should know he is a rapper not a financial expert. I don’t see how what he did was illegal or could be construed as such.

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avatar Ralph

Interesting post exploring one of the ways celebrities could influence investments. I think many would agree that the entertainment industry can be an influence on the general public.

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avatar eric ♦1,549 (Half-Dollar)

I don’t know if I should take money advice from someone named 50 Cent ;)

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