Twitter stock plunged 10% in premarket trading on Monday after it permanently banned President Trump’s account on Friday evening.
President Donald Trump was one of the most followed individuals on Twitter (NYSE: TWTR), with over 88 million followers. However, his account has now become the subject of a widespread ban by the biggest social media companies in the world, including Twitter, Facebook, Instagram, YouTube, Spotify, Pinterest, and more.
Twitter suspended the account in the wake of the storming of the Capitol in Washington D.C. by Trump supporters last Wednesday after the outgoing president shared conspiracies about voter fraud and election theft on the site. The microblogging site stated that they blocked his account “due to the risk of further incitement of violence.”
Twitter’s rival, Facebook (NASDAQ: FB), also banned Trump’s account for the remaining two weeks of his presidency, with CEO Mark Zuckerberg defended his decision to do so by stating that Trump was using his account to “undermine a peaceful transition of power and risking sparking more violence.”
Why did Twitter stock fall after Trump was banned?
Twitter’s stock likely fell on Monday as investors are now worried that the Trump suspension might erode some interest in the platform, especially from Trump supporters and Republicans. Shareholders may also be anticipating boycotts of the app, driven by those that view the decision as politically motivated and a way to silence a major conservative voice.
Last week, German Chancellor Angela Merkel condemned the violence in Washington. However, today a representative of hers has said that she finds Trump’s Twitter ban ‘problematic’ as freedom of opinion is a fundamental right of “elementary significance.” The issue has raised concerns about technology companies having too much control and power over free speech. On the other hand, Facebook and other tech companies have also recently come under fire over their handling of harmful misinformation too, so if they had not imposed the ban they may have also been scrutinized.
Twitter’s Trump ban
Twitter made some explanations in a post linked to one of their Twitter accounts as to why they banned Trump. They said that his tweets included further indications of him calling the election a fraud and claims that he encouraged more violence at the Inauguration by stating that he will not be attending which many believed was a way for him to say that the event would be a safe target for future attacks as he will not present.
It was a significant move for Twitter and gave a rare, totally transparent window into how social media companies decide what stays and what goes — which social media investors don’t usually see. Even though Twitter’s stock has suffered slightly recently due to the decision, the ruling has already been legitimized by many other companies following suit and suspending Trump’s account signaling that the stock should make a rebound soon.
A MyWallSt subscription gives you access to over 100 market-beating stock picks and the research to back them up. Our analyst team post daily insights, subscriber-only podcasts and the headlines that move the market. Get your free trial now!
MyWallSt operates a full disclosure policy. MyWallSt staff currently holds long positions in companies mentioned above. Read our full disclosure policy here.