The political rhetoric of corporations: how do tweets affect stock price?

Tesla shareholders are well aware of the value of its owner, Ilon Musk's tweets. His public altercation with President Trump in June 2025 cost the company $150 billion in market capitalization in a single day. But this is not an isolated incident. In a world where social media has become an integral part of corporate communication, CEOs and spokespeople are increasingly daring to publicly declare their position on sensitive political issues. And any careless post in an official account can cost shareholders billions of dollars;

How exactly this mechanism works is described in astudy by Elizabeth Kempf of Harvard Business School and William Cassidy of Washington University in St. Louis.

The authors found a clear pattern: politically colored statements by companies lead to an average decline in their stock price by 21.3 basis points over 10 trading days. Unexpected political statements are particularly costly - when a company suddenly changes its position or speaks out for the first time on a political topic. In such cases, the loss reaches 29.5 basis points.

The authors analyzed more than 4.4 million posts on the official Twitter (now X) accounts of the largest U.S. companies from the S&P 500 Index from 2012 to 2022. Then, using AI, all tweets were categorized based on their linguistic similarities to statements made by Democratic and Republican congressmen. "Democratic" topics included green energy and combating climate change, racial, gender and social equality, affordable healthcare, legalization of migrants, diversity and inclusion issues. "Republican" topics covered tax cuts, support for veterans and increased military spending, oil and gas issues, and restrictions on migrants.

As recently as a decade ago, large companies in the US avoided politics on social media. Their tweets focused on their own products, services, and customer interactions. Political statements were rare - less than 1% of total posts between 2012 and 2017. But starting in 2017, thingschanged dramatically: the volume of political statements in X by large corporations more than doubled. By 2022, such tweets already accounted for more than 6% of all corporate posts. Virtually all of this growth has come in support of the Democratic Party's agenda. And this trend is evident regardless of the state where the company is located (in "Democratic" or "Republican"), the CEO's political views, industry, size of capitalization and whether the company works with retail customers or in the B2B segment. For example, Duke Energy's declaration of $1 million to support racial equity programs after the assassination of George Floyd was described by researchers as typically "Democratic.

Patriotic post by workforce services provider Automatic Data Processing on Veterans Day - in their version, a typical "Republican" post.

Researchers cite three key events that launched a wave of corporate activism in 2019.

It started with BlackRock CEO Larry Fink's call for corporations to become more socially responsible businesses.

Then there was the declaration by the Business Roundtable, a lobbying association of CEOs of major US companies, that the drive to increase profits should not be the sole purpose of business. The Axios publication quoted the document at the time, "Every CEO/company is vulnerable to instant social media protests. Undecided CEOs and companies are unable to hold a punch." Journalists recalled that five years before the top executives' declaration, the same thing  wrote by Pulitzer Prize winner Steven Pearlstein. In his view, corporate America, by focusing solely on increasing shareholder value, has ceased to consider the interests of society, employees and customers and this has resulted in material losses. In the age of social media, businesses cannot ignore public opinion and must become socially responsible.

All of this has led to ESG investing becoming mainstream by the 2020s and a rapid growth in investing in assets that meet sustainability goals.

In its 2018 ad campaign, Nike supported Colin Kapernick, a former NFL player who protested police violence. 

Market reaction: at first Nike's stock dropped 3% due to the boycott by conservatives, but rose 5% a month later thanks to support from a younger audience. 

In 2020, Goya Foods CEO Robert Unanue publicly praised Trump, saying: "We are all really blessed to have a leader like President Trump." 

Goya's stock is not publicly traded, but the company's business has been affected by the CEO's political stance. Sales fell slightly because of the Democratic boycott, but then increased due to Republican support.

In 2021, Ben & amp;Jerry's announced a boycott of Israel, saying it was halting ice cream sales "in the occupied Palestinian territories," drawing the ire of pro-Israel groups. 

Market reaction: the price of American depositary receipts has dropped nearly 8% in 6 days due to threats of boycott of Ben & Jerry's products and lawsuits. 

That same year, Delta Air Lines criticized a new Georgia election bill that Democrats said restricted voters' rights by making it harder to get to the polls. It required, for example, that all voters have IDs.Critics said it restricted black and elderly voters who had difficulty getting them if they lived in remote areas.

The market had little reaction, but Republicans threatened to eliminate tax breaks for the airline.

A year later, The Walt Disney case against Florida Governor Ron DeSantis - "Don't Say Gay" - broke.

Disney has publicly opposed a state law restricting the discussion of LGBTQ+ topics in schools. 

There were fakes on social media that the stock had fallen by tens of percent. This was later refuted. The stock declined modestly, and overall it was due not only to the standoff with DeSantis, but also to the economic downturn after the pandemic. 

But why do companies write about politics if it affects their business? According to the authors of the study, the reason - paradoxically - is the desire to attract new investors. No major company in the S&P 500 can have exclusively people with the same political views as its shareholders. So in a polarized world, any political statement will inevitably drive away some shareholders, but they will be replaced by supporters of the company's declared values. In addition, a temporary decrease in the share price after a political tweet will also attract apolitical buyers.

It is important to note that 93% of all political corporate tweets are "just words" without specific commitments or actions. Companies are more likely to signal loyalty to certain values than to communicate real changes in corporate policy;

Towards the end of the study period (2022 - 2023), a new trend emerged. Companies began to withdraw support for DEI initiatives and talk less and less about sustainability and ESG. Since Donald Trump's election, more than 200 companies in the S&P Index have rejected diversity policies. There have been no large-scale studies on the impact of this decision on company stocks yet.  

Study the ownership structure of the company. For example, stocks of companies with a high proportion of ESG funds among investors may be less likely to decline on "Democratic" announcements. And companies in classic "Republican" sectors are unlikely to take much risk by congratulating veterans on Memorial Day;

Don't concentrate investments in companies with similar political views - this creates correlated risks.

A decline in the company's stock after a "political tweet" could be a good buying opportunity if the company's business is stable and there are no other reasons to fall;

Understanding the mechanisms by which political statements affect share prices gives investors a competitive advantage. The ability to anticipate and correctly interpret corporate political statements can be a source of additional returns in an era of increased politicization of business.

To conclude I'll conclude with data from another study, "Social Media Market Signals" (it covers 2013 through 2021). It says that positive news on social media usually comes after a stock has risen and a pullback follows within the next 20 days. But if there is a sharp increase in the number of posts about a stock - no matter what kind, but often negative - it is often followed by a further drop. "This is so true that a trading strategy built on these results would yield an average excess return of 4.6% with a Sharpe ratio (a measure of risk-adjusted returns) of 1.2 - which would be solid by Wall Street standards," quotes the MarketWatch study and adds: "Please shut up if you want to make money in the stock market." 

This article was AI-translated and verified by a human editor