My thoughts on FB

29 cze 2020

I’m not a single-stock type of trader. It’s never been my style and never been my strength. However, I do have a lot of thoughts about them and FB is always one of those companies I find myself talking about.

Before I get into it, I do want to channel some inner-AMZN Leadership Principles here. Frugality. It’s not about being cheap or spending less money - it’s about doing more, with less. If you have “scrappy” on your buzzword bingo card, feel free to mark it off here. The coronavirus disaster was a was a wake-up call, a warning to companies to try and crack the frugal code once again. How can we do more, with less….

Big-Tech, big-[insert industry here] has a certain way of operating. Everything that these companies do is calculated. As much as it might not work out or seem at times, every headline action is analyzed/calculated. I’m going to do “X” in order to have the outcome of “Y.”

Now for FB, shares are trading $45 off its recent highs on a continuing string of reports that companies are pulling their ads (and ad dollars) from the platform. Companies like Patagonia, Coca-Cola, Starbucks, and Hershey’s all have stated they’re done… for now. I’m sure this list will get longer.

But why? Why now? The issues they’re calling out aren’t anything new. If anything, they have been front and center for quite some time now. And not just for FB, but for the entire 24/7 news media landscape. Misinformation wasn’t just invented along with social media – keep in mind, there are still people out there who think the world is flat, that Godfather III was a good movie, and a certain congressman who thinks Guam will tip over into the ocean.

If you really want to take a stance - a genuine stance - you take it sooner, rather than later. You don’t wait. You don’t let optics get in the way of what you’re doing. This is why I don’t think these companies are taking the stance they think they are. Paid-social has always been an expensive marketing tool. And what better time to cut your expenses than during a recession and use the veil of social action to do it. That way you can cut your expenses, and build brand equity and awareness at the same time. Win/win. I am by no means agreeing/disagreeing with their actions, I just think we should hold the applause until we try and understand the intent of this lazy “boycott.” Keep in mind, the majority of these companies lean towards the consumer (organic cotton pullovers, sugary drinks, etc.), who is getting smoked right now. If revenue drops, they can spin it to say it was because they curtailed marketing efforts due to social forces, and not because of a drop in aggregate demand (which is harder to swallow on an earnings call). They cut ad spending for social action, to save money. This is calculated frugality, not social action.

You want real action? Be done all together. Done. Forever. Not a 30-day hiatus from “spending ad dollars.” My attempts at going keto have lasted longer than that. Taking a stance does not have an end date. If it does, it’s called a temper-tantrum.

If I was that single stock trader, I’d see this as an opportunity to go long FB at a cheaper price than last week.