Facebook Stock Recovers From Fall As Ad Boycott Continues Growing

The list of big-name companies saying they will pull advertising on Facebook and other social media platforms increased over the weekend, as they join an effort intended to curtail hate speech and other divisive content. But Facebook (FB) stock and Twitter (TWTR) stock reversed after falling in early trading and were up in recent action.


Over the weekend, Starbucks (SBUX), PepsiCo (PEP), Jim Beam, Levi Strauss (LEVI) and Diageo (DEO) announced plans to stop running ads on Facebook and elsewhere in some cases, for varying lengths of time.

Coca-Cola (KO) said it will stop paid advertising on all social media platforms globally for at least 30 days. Starbucks did the same, saying it would do so “while we continue discussions internally, with our media partners and with civil rights organizations in the effort to stop the spread of hate speech.”

Facebook stock initially dropped 4% then bounced back. It climbed 2.1%, closing at 220.64 on the stock market today. Twitter stock, which initially fell 3%, climbed 1.5% to 29.49.

Short-Lived Impact For Facebook Stock?

Raymond James analyst Aaron Kessler, in a note to clients Monday, said he expects the duration of boycotts for most advertisers to be short-lived.

“We believe the financial impact during the third quarter will be minimal, assuming no large expansion,” Kessler wrote. “We are optimistic that Facebook’s recently announced changes will help alleviate advertiser concerns.”

Kessler maintained a strong buy rating on Facebook stock.

The decision by companies to not advertise came after several civil rights groups, including the Anti-Defamation League and the NAACP, created a campaign that wants ad spending pulled from Facebook for the month of July. The groups are protesting what they say is the company’s failure to make its platform a less-hostile place.

Boycott Impact On Social Media

On Friday, Facebook stock dropped 8.3%. That happened as consumer goods giant Unilever (UN) said it will stop advertising on Facebook, Instagram and Twitter for the rest of the year. Facebook stock recently hit a record high. It was holding up as the ad boycott got underway, until the Unilever decision. Since hitting a record high of 245.19, Facebook stock is down about 12%.

The ad boycott against Facebook is known as “Stop Hate for Profit,” which began after the death of George Floyd. In addition, it calls for Facebook to do more to stop hate speech and misinformation. Facebook is also the owner of Instagram. Twitter wasn’t a target of that boycott, but it has also come under scrutiny among advertisers.

Other companies and brands agreeing to boycott Facebook for varying lengths of time include Verizon (VZ), Patagonia, Unilever-owned Ben & Jerry’s, North Face, Eddie Bauer and Recreational Equipment.

On Friday, Facebook Chief Executive Mark Zuckerberg in a Facebook post outlined a number of initiatives to address hateful content as well as the 2020 election.

Defusing Boycotts In The Past

Ad boycotts are not new to Facebook. It has faced them in the past and defused them with policy changes.

Facebook gets about 98% of its revenue from advertising. It has more than 8 million active advertisers, the vast majority of them coming from small and medium-size businesses.

Neither Facebook nor Twitter responded to a request for comment.


Facebook Stock Dives As Facebook Ad Boycott Goes Viral; Is It Still A Buy?

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Written by Angle News

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