The advertising boycott on Facebook has resulted in a 12% dive in the stock price since Friday.
A couple of weeks ago, Twitter has hidden one of Donald Trump’s tweets behind a “glorifying violence” warning and disabled that tweet’s engaging options.
“I don’t think that Facebook or internet platforms, in general, should be arbiters of truth.”Mark Zuckerberg
When Zuckerberg was asked about Twitter’s initiative and whether if Facebook will take a similar stance, he replied, “I don’t think that Facebook or internet platforms, in general, should be arbiters of truth.
I think that’s kind of a dangerous line to get down to, in terms of deciding what is true and what isn’t. And I think the political speech is one of the most sensitive parts of a democracy. And people should be able to see what politicians say.”
Following that statement, many companies decided to boycott advertising on Facebook and some on Twitter too. More than 100 brands and agencies have now joined the boycott.
At first, they were relatively small companies, then companies like Unilever, Verizon, Coca-Cola, Hershey’s, Levi’s, Diageo, and Starbucks decided to join the boycott.
As a result of that uncertainty, the value of Facebook stocks plummeted.
“We’ve opened ourselves up to a civil rights audit, and we have banned 250 white supremacist organizations from Facebook and Instagram.”Mark Zuckerberg
Zuckerberk fights back
On Friday, Zuckerberg announced several steps to eliminate hateful content in ads, tamp down on false claims leading to the 2020 elections, and make progress on racial justice.
He added, Facebook will hide or block content considered hateful or that could harm voting, with no exception for politicians, as Twitter has done to President Trump and others. That was surprising since he had previously spoken out against Twitter’s approach.
“We’ve opened ourselves up to a civil rights audit, and we have banned 250 white supremacist organizations from Facebook and Instagram. The investments we have made in AI mean that we find nearly 90% of hate speech before users report it to us, while a recent EU report found Facebook assessed more hate speech reports in 24 hours than Twitter and YouTube. We know we have more work to do, and we’ll continue to work with civil rights groups, GARM, and other experts to develop even more tools, technology, and policies to continue this fight.”
Is this the time to run away from Facebook stock?
The question remains. Should investors run away from Facebook or is this a buying opportunity?
Facebook is a huge company where the majority of ad revenue is coming from SMEs. The fact that some major advertisers are halting their advertisements for a short period might end up becoming irrelevant in the long term.
Some companies may also be doing this boycott as a marketing strategy to raise brand awareness or prove a point. It’s expected that companies may soon start advertising on Facebook again. Also, Mark Zuckerberg’s announcement of eliminating hateful content might be the step in the right direction to help regain these advertisers.
Facebook has been involved in controversy and scandals for the last decade and it moved on. This boycott might not last for a long period let alone forever. As a result, the drop in the stock price may make it enticing to buy.