Bud Light May Now Have a Lawsuit on Its Hands After Shareholder Values Tank
Corporations that wrecked their images in woke marketing campaigns could pay a price for decisions that cost shareholders money.
On May 30, America First Legal took to Twitter on a fishing expedition looking for disgruntled shareholders who have seen their investments flow down the drain faster than a barrel of Bud Light since the beer’s embrace of transgender activist Dylan Mulvaney led to a weeks-long boycott that shows no sign of stopping.
“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,” the law firm posted.
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: info@aflegal.org https://t.co/mEbMWPp8jk
— America First Legal (@America1stLegal) May 30, 2023
Newsweek wrote that the strategy appears to be to sue the companies over decisions that led to massive stock declines.
Anheuser-Busch InBev, which makes Bud Light, has seen its stock price drop 9 percent this year, including a 5 percent drop May 30, according to MarketWatch.
The MarketWatch report cited figures from Bank of America based on Nielsen research covering four weeks that ended May 20. Data shows Anheuser-Busch volume dropped 17 percent across multiple brands, with Bud Light leading the decline with a 28 percent sales drop while Budweiser was down 16 percent, Michelob Ultra down 10 percent and Busch down 12 percent.
Target has also paid a price for promoting “pride” merchandise. A backlash against it led to a 12.6 percent stock price drop in only a few days, according to Fox Business.
Kohl’s is also facing the wrath of consumers for offering “pride” clothing for babies.
In early May, HSBC analyst Carlos Laboy said the Mulvaney fiasco raised questions about the wider ability of the company, according to Fox Business.
“Why did its U.S. leadership underestimate the risk of pushback given the recent experience of other firms? Is A-B hiring the best people to grow the brands and gauge risk?” he wrote.
“If Budweiser and Bud Light are iconic American ideas that have long brought consumers together, why did these marketers fail to invite new consumers without alienating the core base of the firm’s largest brand? These questions are not trivial to the crisis and say a lot about the state of A-B’s marketing culture,” he wrote.
Newsweek said that America First Legal, which did not return requests for comment, appears to be laying the foundation for what’s called a “Stock-Drop Lawsuit.”
In concept, such lawsuits claim a company did not fully discharge its fiduciary obligations to shareholders ahead of a decline in the value of their stock.
Neama Rahmani, a former federal prosecutor, said that could be hard to prove.
“Whether it’s a direct action by a shareholder or a derivative suit on behalf of the corporation, the plaintiffs will need to prove negligence, breach of a fiduciary duty, or some other basis for liability,” Rahmani said.
“It’s a stretch to argue that the officers and directors violated the standard of care by moving forward with inclusive LGBTQ marketing strategies. I can see a judge dismissing this type of lawsuit at the pleading phase if a lawyer tries to move forward,” Rahmani said.
But columnist Jonah Goldberg argued in the Los Angeles Times that getting corporations out of politics is a good thing, noting, “in a culture where everything is politicized, everything is, well, politicized.”
“Bud Lighting is here to stay because boycotting has become a kind of reverse Veblen good. In economics, Veblen goods are things you buy not for their intrinsic worth but to display how much disposable income you have. A Marxist might call that ‘vice signaling.’ Bud Lighting is a way to telegraph to the world the kind of person you are by what you won’t spend money on,” he continued.
“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.”
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