Despite Consecutive Ad Boycotts, Facebook's Stock Recovers... Zuckerberg-Civic Groups Dialogue in Focus

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Facebook is standing firm despite consecutive advertising boycotts. More than 750 companies have joined the boycott this month, pledging not to advertise on Facebook, but the results, future direction, and potential changes at Facebook remain uncertain. CEO Mark Zuckerberg and the civic groups leading the boycott are scheduled to meet and hold talks on the 7th (local time).

According to Bloomberg and others on the 3rd, a total of about 750 companies have participated in the advertising boycott so far. Most have said they will stop advertising on Facebook and Instagram this month, while some have pledged to refrain from advertising for several months. Major global corporations such as Pepsi-Cola, Starbucks, Microsoft (MS), and Honda Motor have joined in large numbers, and 200 companies announced their participation in the boycott within the last 24 hours. The number of participating companies is rapidly increasing.

As a result of the boycott, Facebook's stock price plummeted on the 26th of last month. According to Bloomberg, Facebook's stock price, which was $235.68 on the 25th of last month, dropped 8.3% in one day to $216.08. This caused a market capitalization loss of $56 billion in a single day, and Zuckerberg's fortune also decreased by $7.2 billion. With the rapid increase in companies joining the boycott, Facebook seemed to be facing a 'crisis.'

However, Facebook has revived. The stock price mostly recovered this week. It closed at $233.42 on the 2nd, up 8.03% since the 26th of last month. The closing price on the previous day, the 1st, was $237.55. This surpassed the pre-plunge level. Zuckerberg's wealth also quickly recovered simultaneously.

This stock price recovery stems from the fact that the proportion of advertising revenue from companies participating in the boycott is small within Facebook's total revenue. The Wall Street Journal (WSJ) explained that Facebook's annual advertising revenue comes from over 8 million advertisers. As of last year, total advertising revenue was $69.7 billion, but the annual advertising spending of the top 100 companies was only about $6.4 billion. The rest mostly comes from small and medium-sized enterprises.

[Image source=AP Yonhap News]

Ultimately, it is analyzed that the boycott participation of large corporate advertisers alone is unlikely to deliver a direct blow to Facebook's profits. WSJ reported, "Unless the boycott becomes much more widespread and this issue persists for a long time, Facebook is unlikely to suffer significant economic damage." MarketWatch predicted, "Advertiser companies hit by COVID-19 will gain brand promotion effects by participating in the boycott without spending money."

Facebook executives plan to meet with the civic groups leading the boycott on the 7th of this month. Three civic groups, including the National Association for the Advancement of Colored People (NAACP), communicated with Facebook last week, expressing their desire to meet with Zuckerberg, who accepted the request.

The civic groups are demanding ten measures, including placing a civil rights expert within Facebook's management. One of the demands is to publicly post regular external audits reviewing actions against hate speech and misinformation on the homepage. The civic groups emphasize that a person knowledgeable about civil rights should be in an authoritative position to set policies regarding content.

However, it is uncertain whether meaningful results will be achieved in the meeting with Zuckerberg. On the 2nd, Zuckerberg reportedly expressed privately to employees that he would not yield to the advertising boycott. According to IT media The Information, Zuckerberg said, "I think all advertisers participating in the boycott will return soon." He is known to have emphasized that he will not change internal policies due to the boycott.

This content was produced with the assistance of AI translation services.