Facebook’s advertising exodus over hate speech poses risks to revenue

Stock tumbles more than 8% after Unilever, one of the world’s largest advertisers, halts spending on Facebook propertiesA 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.

“Given the amount of noise this is drawing, this will have significant affect to Facebook’s business,” Wedbush Securities analyst Bradley Gastwirth wrote in a research note. “Facebook needs to address this issue quickly and effectively to stop advertising exits from potentially spiralling out of control.”

The number of coronavirus cases has surged in the intervening months, prompting many parts of the country to slow or rollback reopening efforts and giving advertisers added justification to rein in marketing spending. Facebook will eke out 1% revenue growth in the June period, followed by a 7% increase in the third quarter, according to analysts’ current projections, by far the smallest quarterly growth increases since the company went public.

Zuckerberg responded on Friday to the growing criticism, saying that Facebook would label all voting-related posts with a link encouraging users to look at its new voter information hub. The social network also expanded its definition of prohibited hate speech for advertising.

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