What Tesla’s fall from grace can teach investors

Mark Hulbert explains why boycotting products is more effective than shunning a stock

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Protesters at a Tesla facility just outside of Minneapolis on March 22. Photo: Chad Davis/flickr.

(Mark Hulbert, an author and longtime investment columnist, is the founder of the Hulbert Financial Digest; his Hulbert Ratings audits investment newsletter returns.)

CHAPEL HILL, N.C. (Callaway Climate Insights) — If you had any doubts whether it’s boycotts or selling stock that sends a more forceful message to company management, Tesla’s recent experience should resolve the debate once and for all.

This perennial debate has been at the core of activist investor strategizing for years. On the one hand, there are those who believe that if enough investors refuse to own a company’s stock, its leaders will be persuaded to change their policies. On the other hand are those who insist that boycotting a company’s products is what really sends a powerful message.

To understand why Tesla’s experience largely resolves this debate, consider first the longstanding campaign to avoid ExxonMobil XOM 0.00%↑. The company has consistently been at the top of lists of stocks for climate investors to never own, not only because it is the largest oil and gas producer in the U.S. but also because of revelations that it knew many decades ago that the use of its products contributed to global warming.

Nevertheless, ExxonMobil has not appreciably suffered at the hands of these campaigns to not own the company’s stock.