Three lessons for leaders from Trump’s tweets about COVID-19

Love him or loathe him, people pay attention when President Trump tweets — and so does the stock market.

This can teach leaders important lessons about communicating with stakeholders during crises, according to Venky Shankar, a marketing professor at Texas A&M University’s Mays Business School.

Shankar has used statistical and machine learning to analyze the effects of Trump’s tweets on the stock market since the first reported case of COVID-19 in the United States on Jan. 21.

He said it’s no surprise that all stock market indexes fell as COVID-19 continued spreading during its first 50 days in the country.

“What’s interesting, however, is that Trump’s tweets themselves also had a significant negative effect on the stock market — at least initially,” said Shankar, who also directs research at Texas A&M’s Center for Retailing Studies.

In the early weeks of the pandemic’s arrival — late January until mid-March — some of Trump’s Twitter messages either downplayed the rapidly escalating outbreak or were irrelevant to it, Shankar said.

For example, in a tweet on the morning of March 9, Trump compared the number of cases and deaths attributed at the time to the novel coronavirus to the much-larger annual figures for the influenza virus, noting that “Nothing is shut down, life & the economy go on.”

“He appeared to minimize the threat of this coronavirus, when reports from experts indicated otherwise,” Shankar said.

This went against what his social media followers expected, so their response, as reflected in the stock market, was largely negative.

Shankar said he does not know who did the most retweeting — Trump supporters or critics — since he studied aggregate numbers of thousands of retweets, and most of them did not include comments.

Still, as these tweets were retweeted, the stock market fell.

Shankar said that for every 1,000 retweets of one of Trump’s coronavirus tweets, the Dow Jones Industrial Average fell by about 43 points.

“As the situation became grim and the tweets contained comments on media and other parties, the stock market appeared to show a loss of confidence,” he said.

That started to change in mid-March, when Trump began using Twitter to acknowledge the severity of the disease and its spread, and to share updates from experts and news about the federal government’s proactive measures.

“Leaders should instill confidence during uncertain times,” Shankar said. “Now that President Trump’s messaging is more in sync with what is playing out and with experts’ predictions, his tweets no longer have a significant negative effect on the stock market.”

So far, Shankar said, this study has uncovered three lessons for how leaders should communicate during a crisis.

“First, they should reduce uncertainty, not magnify it,” he said. “They can do this by presenting facts and progress toward solving the issue, rather than merely adding to the speculation.”

Second, leaders should set reasonable expectations.

“We learn more about this coronavirus every day,” he said. “To that extent these discoveries are new, they create uncertainties. But we have learned about what we can do to contain the spread of the virus, such as social distancing and frequent hand washing — processes that alleviate uncertainty.”

Finally, Shankar, who was recently interviewed by Forbes, said that leaders must remember that social media platforms are “a double-edged sword.”

“Whenever we post something, it’s ‘out there’ from then on. This is great when our message aligns with what our followers expect, but can just as easily backfire when it doesn’t,” he said.

When uncertainty lingers for months, Shankar said that leaders can bolster confidence by being upfront about the situation, committing significant resources to ending uncertainty and giving regular progress reports from multiple, expert sources.

“Bringing in Dr. Fauci, Dr. Birx and other members of the White House Coronavirus Task Force was more effective than President Trump’s previous solo tweets in halting further declines in the stock market,” Shankar said.

Now that the pandemic has become a long-term issue, Shankar said Trump should consider sharing more facts and scientific expertise about the most important remaining uncertainties: how long this might last and how it might end.