WASHINGTON. In volatile markets like this one, we reassure ourselves that all’s well by quoting that old song, “What a difference a day makes.” Unfortunately for shareholders of Facebook (symbol: FB) and Twitter (TWTR), after management delivered disappointing earnings reports and uninspiring second-half guidance last week, both company’s shares promptly ignited like a pair of rocket-sleds and blasted down the Road to Oblivion.* Ditto Netflix (NFLX), which began it’s own cliff dive Friday, again due to disappointing numbers.
Sellers hammered FB and TWTR shares last week. The beatings continue today. As of 2 p.m. ET, Twitter dropped another 7.3 percent. Investors already jackhammered the stock for a 21 percent loss late last week. NFLX is down nearly $90 per share from its recent high. What a shellacking these stocks are taking, despite the fact that they still made a lot of money.
For its part, Facebook has lost roughly 3-4 percent Monday as we write this article. That’s on top of its sickening 20 percent loss based on last week’s disappointing earnings report.
Limiting today’s discussion to Facebook and Twitter, It’s not like either of these companies is in terrible shape. It’s just that the torrid growth model both companies’ investors expected would last forever seems to have run into a brick wall. Cited reasons include the active culling of automated troll accounts and sites as well as the EU’s new mandatory privacy provisions. But what the financial media is failing to look into is a major, yet hidden additional reason for both companies’ anemic numbers.
Censorship on social media: A very bad business practice by Facebook, Twitter
What reporters have conveniently failed to investigate is the flagrant, anti-conservative user censorship both companies actively embrace. The strategy behind this inconvenient truth is the vigorous attempt by FB and TWTR to shut out the conservative and Republican message in the lead-up to Election 2018. Meanwhile, the country’s official “Social Democrat” party can smear its opponents unhindered right up to election day. A Republican fact becomes “hate speech.” But a Democrat smear somehow morphs into the truth.
It’s not unfair to compare the actions of both Facebook and Twitter to the IRS’ illegal strangling of would-be conservative PACs and other Republican campaign organizations in the lead-up to Election 2012. Some conclude that by stifling funding mechanisms for Republican candidates including Presidential candidate Mitt Romney, these IRS efforts to de-fund the opposition may, in fact, have illegally swung the election to Barack Obama. Hard to prove, yes. But the suspicion remains, particularly among those non-Democrat individuals and organizations illegally sent to the sidelines by the IRS in 2012.
But we’re talking about stocks here, right? What does all this have to do with the sudden user-stagnation at Facebook and Twitter? Simple, easy. True, by having to tighten up on database and personal information sharing, and by endeavoring to drastically cut out truly fake sites and Twitter troll-bots, these rather substantial site adjustments are offsetting new users added, at least for the present. But there’s more to this story.
Corporate virtue-signaling is very bad business
What nobody is mentioning is the elephant in the room: the crude, hyperpartisan, SJW censorship tactics both Facebook and Twitter are imposing on conservative and Republican users and accounts. This is virtue-signaling on steroids. And we’ve denounced it in our columns again and again, because it’s not good for business, for the underlying stocks or for the stockholders themselves.
For example, Twitter has long deployed its sneaky “shadow banning” technique to stifle communications from users and sites it doesn’t like. Mainly, conservative and pro-Trump sites.
Those victimized by shadow banning will discover that suddenly, their once-robust user numbers have slowed to a crawl without their understanding exactly why.
The reason why is that Twitter’s algorithms have snared another suspected conservative and/or Trump supporter. Having done so, they render each victimized user’s tweets and re-tweets invisible to everyone else. The unsuspecting user sends out a few tweets or retweets to friends and followers every day and suddenly gets back… crickets.
Where did all my Twitter and Facebook friends and supporters go?
The shadow-banned user has, in essence, been sent by Twitter to solitary. That user has been terminated from his or her once-robust social network, often without knowing when or why it happened. Appeals are generally useless. Even if a user is warned before being banned or shadow banned, it’s difficult and time consuming to get reenstated. Purposely so.
Facebook is less subtle. After perfunctory, robotic warnings that pretend to be from a real human being, offending Facebook accounts – nearly always pro-Trump, Republican or conservative – are either suspended or terminated, effectively demonetizing those sites and booting them into oblivion, usually for some offense cited by their robots or their 100 percent left-wing Board of censors.
Both sites have become an absolute no-go zone for anyone with belief systems even slightly to the right of Bernie Sanders et. al.
But both continue to be “fair and balanced” for those of the leftist persuasion. That remains the case even when those users or organizations baselessly smear and slander anyone opposing them.
But again, what does this have to do with the shares of Facebook and Twitter? Quite a lot, actually.
Virtue-signaling = bad corporate policy
It’s asinine for corporations or CEO to virtue-signal or grandstand openly for one political party over another. In the U.S., this virtue-signaling favors left-wing Democrats, reporters and radical “activists” by some 99.9 percent.
Virtue-signaling runs the gamut of activities. It can range from dropping ad campaigns booked with an “offending” organization to inciting active boycotts. But such actions are ruinously counter productive for the business or CEO doing the virtue-signaling.
Whether Democrats, Republicans or fringe elements like it or not, American voters voters today split almost equally into warring camps. The divide remains close to 50-50 by most counts. When a CEO trashes one or the other class of voters, he trashes 50 percent of the company’s potential customers.
When it comes to the next quarter’s earnings numbers, how stupid is that?
Headline Image: Satirical reworking of Wile E. Coyote cartoon still, fair use. Character copyright: Warner Brothers.)
*Note for old movie fans:
The last of the popular Bob Hope/Bing Crosby “Road” pictures — The Road to Hong Kong — was released to moderate success in 1962. Initial plans were made for one more “Road” flick — working name, The Road to the Fountain of Youth. But that project never came to fruition due to Crosby’s unexpected death. An earlier working title — reputed to be The Road to Oblivion — may have proved closer to the mark.