Advertisement
investing

Do Consumer Boycotts Affect Stocks?

If history is a guide, gun control advocates and opponents will cancel each other out.

Maurice Schweitzer is a professor of operations, information and decisions at the University of Pennsylvania's Wharton School.

Some consumers are boycotting businesses with ties to the National Rifle Association. What impact do you expect it to have on those companies' earnings? The school tragedy in Florida galvanized and energized a very activated group of protestors, but history suggests their coordination and energy is unlikely to persist. That's especially true of the calls to boycott companies that are indirectly associated with gun regulation. Roku, for example, doesn't sell or make firearms but streams an NRA TV channel. Vista Outdoor is one of the more vulnerable targets, with 54% of its revenue coming from shooting sports. Nonetheless, I don't expect the company to experience any meaningful drop in sales or a fundamental threat to its business.

How does this boycott against businesses that support the NRA compare with other boycotts in the past? Boycotts are either one-sided or two-sided. The boycott against BP following its 2010 Deepwater Horizon oil spill was one-sided because no groups rushed to BP's defense. The NRA boycott is two-sided, with impassioned groups rallying on both sides of the debate. We saw a comparable scenario play out during the 2012 Chick-fil-A boycott, when protestors looked to punish the fast-food chain after its CEO spoke out against same-sex marriage. Their efforts were hampered by groups on the other side of the issue, who went out and bought chicken sandwiches. This year, we'll see the NRA's 5 million members similarly boost their support for targeted businesses.

Advertisement
Advertisement - Article continues below
Advertisement - Article continues below

What should investors do if they own shares in one of these companies? Some of these companies' share prices might swing a bit, creating potential bargains, but they should stabilize once the movement starts losing steam. Investors should sit tight, hold on to their shares and ride this out.

How much influence can a typical shareholder expect to have with the company? A shareholder who wants to voice an opinion can send the company a letter, but his or her vote in shareholder elections will be diluted by the votes of institutional shareholders. To take a stand, individual investors can invest in mutual funds that avoid or invest in stocks related to issues they care about.

Advertisement

Most Popular

HSAs Get Even Better
Financial Planning

HSAs Get Even Better

Workers have more options with flexible spending accounts, too.
July 2, 2020
Find a Great Place to Retire
happy retirement

Find a Great Place to Retire

Our cities provide plenty of space to spread out without skimping on health care or other amenities.
July 2, 2020
What Are the Income Tax Brackets for 2020 vs. 2019?
tax brackets

What Are the Income Tax Brackets for 2020 vs. 2019?

The IRS unveiled the 2020 tax brackets, and it's never too early to start planning to minimize your future tax bill.
June 20, 2020

Recommended

3 Municipal Bond Funds for Rich, Tax-Friendly Yields
Investing for Income

3 Municipal Bond Funds for Rich, Tax-Friendly Yields

Municipal bond funds allow you to enjoy the benefits of tax-exempt income. By investing CEFs, you can sweeten the pot even further.
July 2, 2020
Is the Stock Market Closed for the Fourth of July?
Markets

Is the Stock Market Closed for the Fourth of July?

Independence Day falls on a Saturday in 2020. As a result, the bond and stock markets are closed for a long holiday weekend. Here's a look at the mark…
July 2, 2020
2020 Stock Market Holidays and Bond Market Holidays
Markets

2020 Stock Market Holidays and Bond Market Holidays

Is the market open today? Take a look at which holidays the stock markets and bond markets take off in 2020.
July 1, 2020
13 Best Vanguard Funds for the Next Bull Market
mutual funds

13 Best Vanguard Funds for the Next Bull Market

Optimistic that the bounce since March is indeed the start of the next bull market? Here are the 13 best Vanguard funds to help you make the most of i…
June 25, 2020