Are you thinking about dropping Facebook (NASDAQ:FB) stock in the wake of the ad boycott? CEO Mark Zuckerberg doesn’t think that investors should be worried.
This week, big brands including Unilever, Coca-Cola (NYSE:KO), and PepsiCo (NASDAQ:PEP) have started pausing their ad spending on Facebook. Their decision is in response to the #StopHateForProfit campaign started last month. The campaign has been led by civil rights groups.
The campaign seeks to starve Facebook of important advertising revenue. The goal is to let Zuckerberg know the world isn’t happy with how he runs Facebook. The company has diversified into making hardware products, providing mobile payment, and selling subscription services. However, advertising is still Facebook’s lifeline. The ad boycott could hit the social media giant where it hurts the most.
The boycott focuses on Facebook’s content moderation policy. Some civil rights groups think that Facebook is too accommodative to people or groups that seek to fan hate or violence. The company has faced accusations about enabling misinformation online.
For example, Zuckerberg came under fire last month for failing to act on President Trump’s controversial posts. President Trump published posts on the 2020 presidential election and George Floyd’s killing. Some people thought that the posts were distasteful. While Twitter CEO Jack Dorsey slapped President Trump’s controversial posts with warning labels, Facebook chose to leave them alone. The failure to act on President Trump’s divisive posts fanned the ad boycott movement.
Zuckerberg doesn’t expect Facebook ad boycott to go far
While the Facebook ad boycott has caused panic among investors, leading some to sell their Facebook shares, Zuckerberg isn’t concerned right now. In an address to Facebook employees, Zuckerberg said that the brands boycotting Facebook ads will be back soon, according to a report from The Information.
Zuckerberg’s comment suggests the executive isn’t worried about the ad boycott impacting Facebook’s financial results and stock. Hundreds of brands have joined the ad boycott. Notably, Facebook has over 8.0 million active advertisers across its platforms, including Instagram.
Wall Street thinks the ad boycott could lead to a loss of less than 5.0% of Facebook’s total revenue. Meanwhile, Facebook executives plan to meet the groups behind the ad boycott campaign to try to contain the damage.
Finally, the gains in Facebook stock this year have helped add over $11 billion to Zuckerberg’s net worth.