Social Media Failures and the Modern CEO

Michael Teague |

Social Media Failures and the Modern CEOElon Musk, CEO of electric car maker Tesla Motors, riled investors last week with a Twitter announcement, saying “Am going to put my money where my mouth is in a major way.”

The big announcement was set for Tuesday, and turned out to be a leasing scheme for the model S sedan that would make it possible, in some instances at least, to own the vehicle for $500 a month, with the option to sell the car back to the company after 3 years.

The actual announcement came during a conference call, but it does bring up the use of social media by company CEOs, especially when it comes to making potentially consequential announcements.



Especially so because the Securities and Exchange Commission announced on Tuesday that companies can indeed use social media sites like Twitter and Facebook to make announcements, provided that they inform investors ahead of time which sites they will be using.

The announcement came as a result of the SEC’s investigation of a July 2012 incident in which Netflix (NFLX) CEO Reed Hastings posted information on his personal Facebook (FB) page about how his company had just hit the 1 billion hours-streamed milestone.  In particular, the Commission wanted to know if Hastings had broken a rule stipulating that such sensitive information be shared with all investors at the same time.

Hastings got off with a warning, but his is not the first incident of CEOs pushing the limit with social media.

Francesca’s Holdings Corporation (FRAN) fired CEO Gene Morphis last year, after he had tweeted about investor meetings, the board of directors, company financials and audits.

Further back, Whole Foods Market (WFM) CEO John Mackey was for a number of years using an alias on a Yahoo! (YHOO) chat forum to trash former competitor Wild Oats Market, among others.  Ten years of the mercurial CEO’s postings ended up being reviewed for a Federal Trade Commission hearing when Mackey and Whole Foods moved in 2007 to acquire the ailing Wild Oats.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
FB Facebook Inc. 147.51 0.95 0.65 7,996,237 Trade
ENB.PFE:CA ENB.PFE:CA n/a n/a n/a 0
FRAN Francesca\'s Holdings Corporation 16.02 -0.10 -0.62 525,216 Trade
NFLX Netflix Inc. 153.09 2.92 1.94 5,694,657 Trade
YHOO Yahoo! Inc. 48.30 0.04 0.08 7,023,222 Trade
WFM Whole Foods Market Inc. 36.81 0.46 1.27 4,258,144 Trade

Comments

Emerging Growth

Blow & Drive Interlock Corp

Blow & Drive Interlock Corp manufactures, markets, leases, installs and monitors a Breath Alcohol Ignition Interlock Device mechanism on the steering column of an automobile and into which a driver…

Private Markets

D-Wave

D-Wave Systems is the first quantum computing company. Its mission is to integrate new discoveries in physics, engineering, manufacturing, and computer science into breakthrough approaches to computation to help solve…

CF0005, LLC dba Mesa-Marshall #1-2

MESA Resources, Inc. ("MESA") is sponsoring the development of the oil & gas well completion project "Mesa-Marshall #1-2". MESA, founded in 1992, is engaged in the acquisition, exploration and development…