Twitter (TWTR - Get Report) has become a popular source of market news in recent years.

On an average day, more than 1 million tweets are written about the Nasdaq 100 constituents alone.

Starting in 2010, the effect that Twitter sentiment and activity have on stocks has been researched and documented in various scientific papers.

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Last June, the European Central Bank sponsored a paper in which researchers found that merely counting the frequency of the term "bullish" could be used to accurately predict equity index movements the following day.

One doesn't necessarily need to build an algorithm to profit from the valuable market insights Twitter and similar platforms offer. Many traders follow popular accounts such as CNBC Now, commentators such as TheStreet.com's Jim Cramer, or the analysts of Banc De Binary and Deutsche Bank.

Here are three examples of times a 140-character message triggered a seismic market movement.

1. The Carl Icahn Call

It was June 24, 2015, and Netflix  (NFLX - Get Report) had announced a stock split two days prior to that.

Investors often like to bet on stock splits because this trading strategy has proven to be profitable in the past.

When a stock becomes nominally cheaper, it simultaneously becomes accessible to a broader group of potential investors. Hence, this new demand tends to push the stock price up for a while after the split.

Netflix was trading up nicely on June 24 due to the split announcement. Then billionaire hedge fund manager and activist investor Carl Icahn tweeted the following: "It took less than a minute for the price to drop like a rock and lose 2.5%."

After a short bounce in the market, likely triggered by purchase orders that still remained in the order book, the stock price continued to decline, closing 3.8% lower and wiping $1.7 billion off Netflix's market capitalization. Many investors were caught off guard, especially those who had traded on the split.

2. Elon Musk's New Toy

Traders monitor Tesla (TSLA - Get Report) Co-Founder and Chief Executive Elon Musk's tweets closely.

That isn't surprising, considering that he managed to shake Tesla's stock price in 2013 by saying in an interview that he thought that the company was overvalued.

Musk is an expressive chief executive who speaks his mind and investors know this.

Then on March 30, 2015, he did it again, surprising investors with a tweet about a new Tesla product.

Tesla's shares shot up by 3% following this announcement during a time when the stock was significantly under-performing its benchmark index.

Immediately, journalists and other Twitter users began speculating on what this product could be. It turned out to be a battery, which excited investors and cause the stock to increase further.

3. The Tweet that Shook the White House

Of course, the tweets from Icahn and Musk are legitimate expressions of facts or opinions.

Not all tweets that have shaken the markets in the past fall into this category. Some are intended to be humorous, while others are malicious hoaxes that intend to cause harm and some companies even fall into bankruptcy as a result.

A tweet from April 23, 2013, is a perfect example.

The Twitter account of the news agency Associated Press was hacked, and the intruder posted the following fake tweet that plunged the markets into panic for a few minutes: "Breaking: Two Explosions in the White House and Barack Obama is injured."

The markets immediately reacted to this tweet, and the Dow Jones Industrial average dropped by 150 points, representing a price decrease of more than 1% within a few minutes. Other major indices followed.

This didn't last long though as traders quickly discovered that the White House was still standing and White House spokesman Jay Carney confirmed that the president was fine.

Twitter reacted swiftly and suspended Associated Press' account. AP had admitted the security breach and had also taken action.

Trading returned to normal within a few minutes, and the Dow industrials closed higher that day.

These three tweets show that Twitter has become a powerful medium for market news because the information is direct and unfiltered and distributed faster than via traditional media. As a trader, it can be highly profitable to trade on tweets, but as the last example shows, some tweets need to be taken with a grain of salt.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.