Twitter NYSE:TWTR) permanently suspended @realDonaldTrump. The company decided to take upon the role of choosing who gets to speak freely and who gets banned. Facebook (NASDAQ:FB) did the same.
On the stock market, Twitter and Facebook stock will probably dip slightly by around 5-10% at the most in reaction to the development. In the medium-term, the impact of choosing a political party may damage advertising revenue. The user base may grow tired of the banning of users and quit the platform. This would result in a slow spiral of users leaving the system.
The more users that leave Facebook and especially Twitter, the more justified investors are in avoiding both stocks. Investors could instead invest in tobacco, cannabis, or companies that pollute. As long as a company posts growing revenue and profits, the reasons for holding the stock does not change.
Social media sites that weaken free speech will alienate their user base, which is bad for business. Investors have other expensive technology stocks to consider instead. While FB stock trades at over 30 times price-to-earnings and Twitter’s forward P/E is almost 60 times, Microsoft (NASDAQ:MSFT) and Adobe (NASDAQ:ADBE) offer better long-term value.
Tech Insider
