Facebook is seeing more and more advertisers pledge to give up advertising on the social media platform, but it could present a buying opportunity, according to Satori Fund investor and founder Dan Niles.
Facebook shares suffered their worst trading day since March Friday when shares closed down 8.3% as more brands signed a pledge urging companies to boycott advertising on the social media platform during the month. July until the moderation of user content improves.
While the #StopHateForProfit promise has attracted some big-name advertisers like Starbucks, Coca-Cola, and Clorox, Niles told Yahoo Finance that the impact on Facebook’s revenue (which topped $ 17 billion in the first quarter alone) you’re probably being overestimated by investors
“If you look at it in the short term, what people need to realize is that these are some of the big names that talk about getting ads from Facebook or other platforms, but the top 100 advertisers are less than 20% of the revenue of the business”. Niles said in an interview with YFi PM of Yahoo Finance, adding that the platform has 160 million commercial Facebook pages, just 8 million advertisers.
“What happens with the virus is the closure of retail stores, more and more companies have to have an online presence. So for me, the real key is how many of those 160 million who are not part of the 8 million advertisers, can they enter the platform? he said.
Facebook CEO Mark Zuckerberg has parted ways with other tech leaders by choosing to limit how Facebook moderates politicians’ posts, and has championed a push to keep posts that others see as problematic with his repeated claim that “political discourse It is important”. / Andrew Harnik, File)
For Niles, whose Satori Fund increased by double-digit percentage in 2020, in part due to his involvement in Facebook, the move for brands to create an online presence as the coronavirus pandemic continues to affect store opportunities. it is too big to ignore. Niles said the trend, along with a new push from the company to monetize shopping experiences on Facebook and its Instagram platforms, led his fund to increase its Facebook exposure on Monday.
Analysts echoed the notion that Facebook’s recent negative sentiment is exceeding the sales impact the company is likely to see. JPMorgan reiterated its overweight rating on Monday, noting that Facebook had dealt with pressure from advertisers before, especially in 2018 after the Cambridge Analytica scandal. Additionally, a Bloomberg Intelligence estimate set the boycott pressure at a cost of approximately $ 250 million in lost revenue compared to the $ 77.1 billion Wall Street expects the company to bring in this year.
Despite opening 2% lower on Monday and trading red after announcements that Clorox and Adidas would join the growing list of advertisers rejecting Facebook, the shares closed 2% more.
