By Krystal Hu

NEW YORK (Reuters) – Kyle Ash snapped up 2,000 pounds ($2,615) worth of Twitter Inc shares as soon as he heard that Elon Musk had become the social media company’s largest shareholder.

The 25-year-old retail worker from Reading, Britain bought into Twitter on Monday after shares surged 27% on news of Musk’s investment in the San Francisco-based company.

Ash paid $49 per share on average, versus the $44 price target from analysts covering Twitter’s stock. Bullish bets that go against Wall Street’s conventional wisdom have been a hallmark of the “meme” stock trading frenzy that has swept many individual investors in the past 15 months.

Ash, who has also invested in meme stocks such as video game retailer GameStop Corp and movie-theater operator AMC Entertainment Holdings, said he hoped celebrity billionaire Musk would bring the same hype to Twitter’s stock. “Everything Elon touches creates a wave in the beginning. I have faith in people’s faith in him,” Ash said.

Millions of investors flocked to Twitter’s stock after Musk, who has more than 80 million Twitter followers, disclosed a 9.2% stake in the company, making it the most bought U.S. stock by retail investors on Monday, data from Vanda Research shows. The $152 million inflow to the stock on Monday was the largest among all stocks and ETFs on U.S. exchanges for the day.

Musk has developed a loyal following of investors who stuck with his company Tesla Inc for most of the past decade while it was still struggling to streamline production of electric cars and make them affordable.

Tesla is now among the world’s most valuable companies with a market capitalization of more than $1 trillion.

Musk, who is also behind other ventures such as rocket maker SpaceX, is the world’s richest person with a net worth pegged by Forbes at $290 billion.

Musk’s popularity with retail investors was one of the reasons why Twitter agreed this week to offer him a seat on its board of directors, people familiar with the matter said.

Musk and Twitter did not respond to requests for comment.

Twitter shares have fallen behind peers amid the company’s push to make its advertising more lucrative and generate more revenue from subscription products. The stock sank 38% in the 12 months to April 1, before Musk unveiled his stake, versus a 13% rise in the S&P 500 Index.

Retail investors account for 9.9% of Twitter’s investor base, according to Vanda. While that is higher than Tesla, where retail investors account for 1.5%, it is significantly lower than AMC, the most popular meme stock, where retail investors account for 40.9% of the investor base.

“Given Musk’s following on social and other media, we expect the news to drive significant retail investor interest in, and activity for, the stock,” Bank of America Securities analyst Justin Post said in a research note this week. He cautioned that the hype could also attract investors who like to short stocks.

GAMESTOP, AMC PLAYBOOK

In investing in Twitter, Musk is borrowing a page from the playbook of AMC and GameStop, whose leaders have also capitalized on their popularity with retail investors to place bets on other companies.

Last month, AMC unveiled a $27.9 million investment in Hycroft Mining Holding Corp, a troubled gold and silver mine operator. Retail investors followed, and Hycroft shares are now trading at seven times what they were worth a month ago.

An investment by GameStop Chairman Ryan Cohen in retailer Bed Bath & Beyond last month led to a doubling in that company’s market value.

Some analysts cautioned the boost in Twitter’s stock based on hype may not be enough to keep retail investors engaged.

Musk’s long-term contribution to Twitter will hinge on whether he can help make the company more profitable, CFRA Research analyst Angelo Zino wrote in a note this week.

“The goal is to better monetize the platform, and we think Musk can only help, not hurt the process, with his recent criticism of the company as a refreshing sign,” Zino wrote.

(Reporting by Krystal Hu in New York; Editing by Greg Roumeliotis and Himani Sarkar)

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