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.

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Companies

Symbol Name Price Change % Volume
ENB.PFE:CA ENB.PFE:CA n/a n/a n/a 0
FB Facebook Inc. 127.96 -2.12 -1.63 28,326,266
FRAN Francesca\'s Holdings Corporation 15.13 -0.06 -0.39 1,216,041
NFLX Netflix Inc. 95.94 0.11 0.11 6,179,471
WFM Whole Foods Market Inc. 28.52 -0.15 -0.52 3,313,269
YHOO Yahoo! Inc. 42.80 -1.35 -3.06 31,888,521

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