F’book ad-exit ‘spiraling’ fears rise

A growing list of Facebook’s advertisers is set to halt spending on social media, undermining the company’s sales outlook and putting its stock price under further pressure.

Unilever, Starbucks, Levi Strauss, PepsiCo and Diageo were among the most recent big names to say they’re curtailing spending, part of an exodus aimed at pushing Facebook, run by Chief Executive Mark Zuckerberg, and its peers to suppress posts that glorify violence, divide and disinform the public, and promote racism and discrimination.

No single company can significantly dent growth at Facebook, which generated $17.7 billion in revenue last quarter alone. But a rising tally adds to pressure on other brands to follow suit, and when combined with a pandemic-fueled economic slowdown, the threat to Facebook deepens.

Shares closed at $216.08 on Friday, down 11 percent since they hit a record $242.24 the preceding Tuesday.

“Given the amount of noise this is drawing, this will have significant impact to Facebook’s business,” Wedbush Securities analyst Bradley Gastwirth wrote in a research note. “Facebook

needs to address this issue quickly and effectively in order to stop advertising exits from potentially spiraling out of control.”

Facebook was already bracing for weakness in its second quarter, which ends this week. Chief Financial Officer Dave Wehner said in an April earnings call the “potential for an even more severe advertising industry contraction.”