Why Facebook Stock Just Dropped 6.5%

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Verizon signs up with the Facebook marketing boycott.

What occurred

Facebook ( NASDAQ: FB) stock took a hit in Friday trading, falling 6.5%through 12: 10 p.m. EDT, in the wake of a statement from Verizon( NYSE: VZ) last night that it is “pausing” purchase of online ads from Facebook and its entirely owned Instagram subsidiary.

So what

On Thursday, the Anti-Defamation League released an open letter slamming Verizon for the existence of among its ads found on Facebook “next to a video from the conspiracy group QAnon drawing on hateful and antisemitic rhetoric.”

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Simply hours later, after close of trading on the Nasdaq, Verizon announced that it is pulling its ads up until Facebook “can create an acceptable solution that makes us comfy” and ensure that Verizon’s advertisements won’t appear on the same page together with posts that Verizon clients might find objectionable.

Now what

How huge of a deal is this for Facebook? Advertising analytics business Pathmatics approximates that Verizon spends about $1.9 million approximately, combined, on Facebook and Instagram advertisements monthly– call it $23 million a year. That’s sort of a drop in the container of this blue chip tech stock’s $734 billion annual income stream, but it’s not absolutely nothing.

Still, the genuine concern will be if Verizon’s prominent time out triggers even more marketers to boycott Facebook, such that the profits losses snowball. There’s a limit to how far this can go, as business that drop marketing will necessarily lose direct exposure relative to companies that continue to purchase advertisements on Facebook.

In the end, I presume this is going to be a type of tempest in a teapot that will not harm Facebook’s service in the long run— but I have to admit that the headings look kind of bad right now, and I can barely blame Facebook shareholders for feeling nervous today.

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Randi Zuckerberg, a

former director previous market development and advancement for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool owns shares of and suggests Facebook. The Motley Fool recommends Verizon Communications.

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