The concerted efforts from big corporations to boycott advertising on Facebook (NASDAQ:FB) is largely a farce. Sharply lower consumer demand is hurting sales. Companies involved in the boycott must curtail advertising spending to lower costs.
Unilever (NYSE:UN) claims that it is cutting ad spending on Facebook and Twitter (NYSE:TWTR) because of Facebook’s policies on hate speech and misinformation. But with billions of monthly active users on the thriving platform, the struggling conglomerate will have to go back to Facebook advertising.
Similarly, Coca-Cola (NYSE:KO) will pause all social media advertising for the next month. And Starbucks (NASDAQ:SBUX) is joining the so-called boycott, too. Unfortunately, Starbucks suffered a disastrous quarter because of the lockdown. Even in China, where business reopened, comparable sales fell 21% in May. In the U.S., it fared worse with comparable sales down 43%. So, if Starbucks ran at 91% of stores opened but will lose money, it must cut its ad budget.
Investors who recognize the boycott as really a spending cut should avoid the above-mentioned consumer goods firms. Instead, buying Facebook and Twitter after a correction in the coming weeks will pay off. Both sites have too big a user base to ignore. Snap (NYSE:SNAP), Instagram, and TikTok are also popular sites whose user base will grow.
