Facebook loses billions of dollars and advertiser exode doesn't stop

Technologies

By CAPosts 29 June, 2020 - 07:02am 42 views

Mark Zuckerberg, founder and CEO of Facebook (Bloomberg)

A growing list of advertisers at Facebook Inc. plans to suspend social media spending, undermining the company's sales prospects and further focusing on its stock price.

Starbucks Corp., Levi Strauss & Co., PepsiCo Inc. and&Diageo Plc son some of the companies that have recently announced a cut in advertising spending, part of an exodus aimed at pressuring Facebook and other companies in the sector to eliminate comments that glorify violence, divide and deinformatn the public, and promote racism and discrimination.

an isolated company can significantly affect growth on Facebook, which generated $17.7 billion in revenue in the last quarter alone. But more companies are under increasing pressure for other brands to follow suit, and if this adds to a pandemic-fuelled economic slowdown, the risks to Facebook are compounded.

"Wedbush Securities Bradley Gastwirth will have a significant impact on the Facebook business," Wedbush Securities Bradley Gastwirth wrote in an analysis commentary. "Facebook must address this problem quickly and effectively to prevent advertising cessations from getting out of control."

As more brands advertise plan to join the boycott or curb advertising spending, Facebook's actions are still under pressure. The stock fell 8.3% on Friday after Unilever, one of the world's leading advertisers, said it would suspend Facebook's property spending this year, which erased $56 billion from the company's market value and removed more than $7 billion from the nbsp&;net value of the executive head, Mark Zuckerberg. The shares closed to $216.08 on Friday after reaching a record $242.24 the previous Tuesday.

Facebook was already preparing for weak performance in the second quarter, which ends this week. CFO Dave Wehner warned in April of a possible "in more severe contraction of the advertising industry."

The social network faces a massive abandonment of advertisers that would hit their finances and long-term profits (Facebook)

The number of cases of coronavirus epped in the months that followed, leading many parts of the country to slow or reverse reopening measures and gave advertisers additional justification for curbing marketing spending. Facebook re record revenue growth of 1% in the June period, followed by a 7% increase in the third quarter, according to current analyst projections, by far the smallest quarterly growth increase since the company went public.

Starbucks said Sunday that it would suspend spending on all social media platforms while holding internal conversations, with media partners and civil rights groups "in an effort to stop the spread of hate speech."

While some companies target social media in general, including Twitter Inc., many are pointing to Facebook specifically. Zuckerberg so more reluctant to put limits on speech, particularly the controversial posts of T.D., Donald Trump, saying he doesn't want Facebook so an arbiter of what's true.

This prompted a consortium of civil rights groups and other advocacy groups, including Color of Change and Anti-Defamation League, to urge advertisers to stop spending on platforms owned by Facebook in July to protest the company's policies.

Zuckerberg friday backed up growing criticism, saying Facebook would tag all voting-related posts with a link that will urge users to consult their new voter information centre.

(C) Bloomberg.-

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