“Shark Tank” reality TV stars Mark Cuban and Kevin O’Leary are both successful businessmen and investors, but they don’t agree on everything.
For example, Cuban recently said that it makes sense for companies to embrace the “woke” ideology.
“There’s a reason nearly all of the top 10 companies by market cap in the United States can be considered ‘woke’. It’s a good deal,” the Dallas Mavericks owner told the Pittsburgh Post-Gazette.
O’Leary disagrees.
“When you’re Disney or you’re a beer company or you’re Target, you have customers of all kinds. Republicans, Democrats, Gender or Non-Gender. It does not matter. You want to sell everything to everyone all the time,” he said on “Fox & Friends.”
“When you get involved in partisan issues, you basically lose 50% of your constituency. Why you would do this when you are a consumer goods or services company, everyone learns, makes absolutely no sense.
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O’Leary went on to point out that in America, the role of a corporation is to serve its customers, its employees and its shareholders.
“Their role is not to educate society on the social issue of the day,” he said.
Here’s a look at two companies that have made headlines for supposedly “waking up.”
Anheuser-Busch Inbev SA (NYSE: BUD)
Anheuser-Busch InBev is the multinational beer company behind Bud Light.
In April, Bud Light teamed up with transgender social media influencer Dylan Mulvaney, who has 10.7 million followers on TikTok. The collaboration sparked a backlash on social media and led to a boycott from some beer drinkers.
Sales of Bud Light in the United States fell 28% in the week ending June 24 from a year earlier, according to consulting firm Bump Williams using data from NielsenIQ.
Bud Light is no longer America’s best-selling beer. The top spot now belongs to Modelo Especial, brewed by Constellation Brands Inc.
The Anheuser-Busch InBev share price also took a hit. Since April 1, when Mulvaney first promoted beer on social media, BUD stock has fallen 13%.
Target Corp. (NYSE: TGT)
In a context of sluggish economic growth, Target was already fighting an uphill battle. In the first quarter, the big-box retailer reported net income of $950 million, down 5.8% from the $1.01 billion it earned a year ago.
Now the company is dealing with the backlash of its Pride Month merchandise, including children’s items and “tuck-friendly” swimwear.
“Since the launch of this year’s collection, we have faced threats affecting our team members’ sense of safety and well-being at work. Given these volatile circumstances, we are making adjustments to our plans, including removing items that have been at the center of the most significant confrontational behaviors,” Target said in a statement.
“Our goal now is to move forward with our continued commitment to the LGBTQIA+ community and to stand with them as we celebrate Pride Month and throughout the year.”
Similar to Anheuser-Busch Inbev, Target stock has not been a hot commodity. Shares fell about 17% in the two months, leading to the loss of billions of dollars in market capitalization.
“When you lose nine, 10, 11, 12 billion dollars in market capitalization, you know you’ve offended someone and that person is your customer,” O’Leary said. “It’s a bad deal. Really bad deal.
O’Leary’s Investment Strategy
As a “Shark Tank” star, O’Leary has invested heavily in startups. But he is also a proponent of investing in dividend-paying stocks.
“Over the past 40 years, 71% of stock market returns have come from dividends, not capital appreciation,” he said in an interview with Forbes. “So the first rule for me is that I will never own things that don’t pay dividends. Never.”
Dividends can be a source of passive income for investors. However, it is important to remember that dividend stocks can still fluctuate.
In fact, Anheuser-Busch Inbev and Target are large cap companies that pay dividends. And their stocks have been volatile, to say the least.
If you don’t like that kind of volatility, you might want to look into reliable earning games outside of the stock market.
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This article ‘Their role is not to educate society’: Kevin O’Leary tears up Cuba’s claim that ‘waking up is good for business’, warns you risk alienating 50% of your customers originally appeared on Benzinga.com
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