In recent years, several corporations have embarked on woke marketing campaigns in an effort to align themselves with progressive social causes. However, these initiatives have come at a cost, not only to their reputation but also to the value of their stocks. As disgruntled shareholders witness their investments dwindling, the legal consequences of these decisions are beginning to loom large.
Law firm America First Legal recently took to Twitter to seek out shareholders who have experienced significant losses due to companies promoting transgender, LGBTQ, and Pride products. The aim appears to be to sue these corporations over decisions that have led to substantial declines in stock prices.
ATTENTION: Are you a shareholder of @Target @Kohls @abinbev, or other companies that are promoting transgender, LGBTQ and PRIDE products and diminishing shareholder value?
We want to hear from you: [email protected] https://t.co/mEbMWPp8jk
— America First Legal (@America1stLegal) May 30, 2023
One such company that has felt the impact is Anheuser-Busch InBev, the maker of Bud Light. MarketWatch reports that their stock price has plummeted by 9 percent this year, with a 5 percent drop just on Tuesday. The repercussions are evident in the decline of Anheuser-Busch volume across multiple brands, including a staggering 28 percent sales drop for Bud Light.
Similarly, retail giant Target faced a severe backlash when it began promoting “pride” merchandise. The negative response resulted in a swift 12.6 percent decline in the company’s stock price within days. Kohl’s, another major retailer, also faced consumer outrage for offering “pride” clothing for babies.
The fallout from these woke marketing campaigns has raised questions about the competence of corporate leadership. Analyst Carlos Laboy questioned the decision-making process of Anheuser-Busch, wondering why its U.S. leadership underestimated the potential backlash. He also questioned the ability of these marketers to expand their consumer base without alienating their existing core customers.
America First Legal’s pursuit of a “Stock-Drop Lawsuit” may face hurdles in proving negligence or breach of fiduciary duty on the part of the companies. However, the mounting shareholder discontent sends a strong message that corporations need to prioritize their fiduciary responsibilities and focus on shareholder value rather than engaging in politically charged initiatives.
While some argue that corporations should step back from politics altogether, returning to their core mission of generating shareholder value, others caution against stifling ideological diversity. Jonah Goldberg points out that boycotting has become a way for individuals to signal their values, leading to a reverse Veblen effect. He suggests that corporations become more conservative in their fiduciary approach rather than ideologically.
Goldberg said, “The lesson for corporations should be to become more conservative, not ideologically but fiduciarily. Although I don’t like some of the excesses already on display in the era of Bud Lighting, if it results in corporations retreating from politics in favor of their core mission — shareholder value — America will be better for it.”
