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Notes on a scandal - when social media controversy meets the stock market

Though no longer surprising, the effect of social media controversies on a business’ livelihood does remain fascinating. As companies chase that elusive KPI called engagement, news tends to travel even faster online - especially whenever major brands are concerned.

Just ask Chipotle Mexican Grill. According to Yahoo! Finance, the international restaurant franchise’s shares “dipped as much as 3.4 percent in early morning trading”. The trigger? The YF headline says it all with “Bourne indigestion: Jason Bourne novelist tanks Chipotle stock with one tweet”. Eric Van Lustbader tweeted followers about his editor’s hospitalisation, allegedly due to dining at Chipotle’s Manhattan restaurant. After removing his original posts, Van Lustbader addressed criticism for jumping to conclusions - and consequently affecting Chipotle shares negatively - with a fresh tweet.

Chipotle Mexican Grill’s stocks take a tumble following Eric Van Lustbader’s tweet

While some of these Twitter users admonished Van Lustbader for broadcasting his knee jerk reaction, his influence, intentional or not, added to recent buzz around Chipotle’s approach to food handling. The chain had been working overtime to shift focus to its renewed, back-to-basics philosophy of quality produce. As reported via YF, branding specialist Austin McGhie commented that “...people are tentative and the slightest pebble thrown into the water can create quite a large ripple. Hence the stock price.”

Some scenarios are more straightforward; Target’s American outlets put a rocket under the conservative shopping public by adopting an inclusive bathroom policy in the first half of 2016. The retail stalwart’s decision was made to support female-identifying transgender staff and customers using women’s bathrooms and fitting rooms. The American Family Association’s resulting petition to boycott was no shock, but by May, Target had reportedly lost USD 6 billion in share values.

On the back of far less noble actions, Volkswagen’s ‘Emissionsgate’ scandal (a.k.a. #Dieselgate) broke in September 2015, generating extensive opinion and analysis from The New York Times to Fortune. Online conversation was emotionally charged as news of the automotive icon’s deception emerged. In October 2015, Mashable forecasted that Volkswagen would face brand tarnish and heavy financial hits, if not prosecution, but could eventually salvage their brand with savvy marketing and strategic ads. “Volkswagen has both the money and the marketing talent to make people forget...but it will only work if it actually does make big, expensive changes in the way it operates.” As of July 2016, the manufacturer “is in the midst of a cost-cutting drive”, according to Reuters.

As these examples indicate, thorough, specific and most importantly, real time brand analytics makes navigating digital crises that little bit easier. As well as social listening, news monitoring and team collaboration are essential when protecting your business and brand.

Salacious headlines will forever be part of news media, as will the emergency meetings they necessitate. Thanks to 24/7 connectivity, however, every community manager, digital strategist, business developer and customer service specialist now needs to be just as on cue as PR directors and brand managers - before the story breaks.

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