How will Facebook Stock React to the Growing Ads Boycott?
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
The current global economic climate appears to be uncertain. The year 2020 has proven to be quite turbulent, and as an investor, you want to be ahead of the pack and prepared to position yourself to turn your financial future around for the better.
Impact of Ads Boycott on Facebook Stock
As an increasingly large number of companies are joining a Facebook advertising boycott, it could mean that many investors stand to lose big. With that said, several stocks in the market have already been plummeting, thanks to the global COVID-19 pandemic, however, based on current circumstances, there are some stocks that are expected to do well.
With the launch of the #StopHateforProfit campaign by the Anti-Defamation League (ADL) and the NAACP, there has been a call on major corporations to put a pause on advertising on Facebook. The movement cites the company’s “repeated failure to meaningfully address the vast proliferation of hate on its platforms.”
Now that it is gaining momentum, a growing list of high-profile brands have brought their advertising to a halt on the platform, including Unilever, Coca-Cola, Starbucks, Microsoft and Verizon. These companies have chosen to show their support and boycott in protest of what they say are Facebook’s failures to stop the spread of hate.
As a result, Facebook’s shares took big hits after other advertisers followed suit and paused their spending. Its stock dropped 8% in last Friday’s trading after Unilever UL, +1.09% halted advertising on Facebook, Instagram and Twitter Inc.
Facebook’s Weathered Past
The billion-dollar question is: can Facebook turn it around? The tech-giant has weathered many controversies in the past, but it remains to be seen how the latest outcry will affect its core business, since most of Facebook’s revenue is acquired from advertising. While losing ad revenue from big brands is painful to say the least, it can get even worse, since, the bulk of the company’s sales come from millions of smaller businesses that rely heavily on the platform.
It now means that with Facebook’s falling stock, investors must be prepared to protect themselves, if they have not already done so. Given the current situation, these stocks appear to be promising in July 2020.
In the wake of George Floyd’s death at the hands of Minneapolis police officers, Zuckerberg has faced fierce criticism for refusing to moderate Facebook posts in which President Trump called civil rights protesters “thugs” and suggested violence when he posted, “when the looting starts, the shooting starts.”
In response, Zuckerberg promised to ban hateful speech in ads and attach labels to politicians’ controversial posts, which will notify users that they are violating the company’s policies.
Will Facebook’s Ad Boycott Impact Zukerberg’s Net Worth?
As the CEO and founder of Facebook, Mark Zuckerberg has complete control over Facebook’s future, thanks to his majority voting rights. Zuckerberg’s net worth peaked at $91.9 billion on June 23, according to Bloomberg; and as of market close on June 28, his new estimated net worth is $82.3 billion.
As the 4th-richest person in the world, his net worth dropped by nearly $10 billion in just one week. Zuckerberg places great importance on Libra, Facebook’s own digital currency, although its reception has been divided thus far.
Additionally, there are many other large companies and nations that are developing their own cryptocurrencies. In the long run, it might be his very own way of diversifying his investment portfolio even further, but time will tell in the end.
Disclosure: Tim Fries has no positions in any of the stocks mentioned, and has no plans to initiate any positions within the 72 hours following the publishing of this article. This article expresses the opinions of Tim Fries. Tokenist Media LLC has no position in any of the stocks mentioned, and does not plan to initiate any positions within 72 hours of the publishing of this article. Please consult our website policy for more information.
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