In the closing days of his term, President Donald Trump has had his Twitter Inc TWTR account suspended as social media giants Twitter, Facebook, Inc. FB, Amazon.com AMZN and others attempt to prevent further deadly protests following last week’s events at the U.S. Capitol.
What Happened? Social media platforms, including Twitter, have suspended Trump’s accounts or are restricting his and his team’s communication with the public. Twitter cited “risk of further incitement of violence” as its reasoning after five people died as protestors stormed the Capitol last week, apparently egged on by Trump’s baseless claims on social media that President-elect Joe Biden’s victory is illegitimate.
Related Link: Investing Pros And Cons Of A Blue Washington
Twitter has permanently banned Trump’s account, while Facebook is preventing Trump from posting for at least two weeks until after Biden’s inauguration. Reddit banned the subreddit group "r/DonaldTrump," Amazon subsidiary Twitch disabled Trump’s channel and Google has removed Parlor, the free speech social media app with a large conservative user base, from its Google Play store.
Why It’s Important: The social media bans have outraged Trump supporters and fueled public outcries that Silicon Valley tech companies are biased against conservative viewpoints and users. The social media companies say they're simply doing whatever they need to do to avoid facilitating more violent protests.
It’s a lose-lose situation for social media stock investors, according to Bank of America analyst Justin Post. Trump had more than 88 million Twitter followers and 33 million Facebook followers prior to the bans. Post says Trump’s followers represent about 47% of Twitter’s daily active user base.
“Our call is that after some deactivation newsflow near-term, strong political activists will stay on Twitter for other content,” Post said.
In the longer term, the recent events will once again bring up debates over the protections provided to social media companies under Section 230 of the Communications Decency Act of 1996. Section 230 gives social media companies like Twitter the right to freely police content on their platforms to shield their companies from potential legal liability.
Post says Facebook and Twitter could face a regulatory overhang in 2021, but a large degree of that risk may be already priced into the stocks. Bank of America maintains Buy ratings for Facebook and Twitter.
Benzinga’s Take: Conservatives outraged at what they see as liberal bias should remember that Trump was Twitter’s sixth most-followed account, and nearly half of active Twitter users followed Trump at the time of his ban.
Trump’s ban will definitely hurt Twitter’s business to a certain degree, but the company was apparently willing to risk alienating its users to prevent playing a role in another deadly Trump rally.
Twitter's stock was down 5.7% to $48.54 at publication time.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.