Consumer goods giant, Unilever (UL) and telecom company, Verizon (VZ) said June 26 that they would halt advertisements on Facebook (FB) and Instagram.
Facebook’s stock dropped 8% by market close on Friday as more advertisers moved to boycott the popular social media site, citing its ongoing problems of hate speech and racism.
“We’re pausing our advertising until Facebook can create an acceptable solution that makes us comfortable and is consistent with what we’ve done with YouTube and other partners,” Verizon’s chief media officer John Nitti told CNBC.
Verizon plans to pull its ads for the month of July while Unilever plans to not advertise on Facebook and Instagram for 6 months.
“Continuing to advertise on these platforms at this time would not add value to people and society. We will be monitoring ongoing, and will revisit our current position if necessary,” Unilever told The Verge.
Following this, Facebook announced a range of new policy changes on Friday that appeared to address concerns by saying that they will “prohibit claims that people from a specific race, ethnicity, national origin, religious affiliation, caste, sexual orientation, gender identity or immigration status are a threat to the physical safety, health or survival of others.”
The new policy will impact only paid advertisements and will not effect posts without paid promotion.
Speaking in a live video stream, Facebook CEO Mark Zuckerberg said, “Facebook stands for giving people a voice, and that especially means people who have previously not had as much voice, or as much power to share their own experiences.” He added, “It’s really important that we make sure our platforms live up to these principles.”
Zuckerberg’s Friday announcement was not enough to reassure other advertisers. Late afternoon the same day, Coca-Cola (KO) and Honda joined 100 different brands announcing that they too were ceasing ads on Facebook for the month of July as part of a broader boycott of Facebook.
Honda cited the boycott campaign on Twitter on June 26 with the hashtag, #StopHateForProfit, saying, “We choose to stand with people united against hate and racism. This is in alignment with our company’s values, which are grounded in human respect.”
The developments were noted on June 26 by Merrill Lynch analyst Justin Post stating, “As of now, our checks have suggested that the impact of boycotts may not be material, but if key influencers in other large sectors join in, there is risk of a near-term ‘snowball’ effect.”
Post maintains a price target of $265 with a 23% upside potential.
Facebook stock is up 5% year-to-date with 30 analysts assigning a Buy rating, 3 Hold, and no Sell ratings which altogether results in a consensus of a Strong Buy on TipRanks. The average analyst price target stands at $247.93 implying 15% upside potential. (See Facebook’s stock analysis on TipRanks)
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