Before Portugal’s Euro 2020 football championship opener, Cristiano Ronaldo was preparing for a pre-match press conference. Two minutes before it began, the Juventus megastar forward put aside the two Coca-Cola bottles placed in front of him and said “agua” (water) while smiling to the journalists.

The reaction to this playful gesture, which included a slew of news articles saying that Ronaldo’s actions were responsible for wiping $4 billion off of Coca-Cola’s market value, has come to illustrate a grave problem.

A post-truth world

In 2016, the Oxford English Dictionary’s Word of the Year was “post-truth.” Post-truth is defined as “relating to or denoting circumstances in which objective facts are less influential in shaping public opinion than appeals to emotion and personal belief”. The phrase gained prominence during the Trump presidency and the UK’s Brexit referendum. But there is a deluge of unsupported claims made every day by people whose prominence helps shape public policy and opinion. Over the past year of the pandemic, for instance, we have all listened to people without any medical qualifications expound on the health crisis. Unfortunately, their comments frequently influenced decision-making.

In the current (social) media landscape, truth can be deliberately manipulated, and disinformation is a growing business. Importantly, we, the readers of information, are naturally programmed to accept ‘evidence’ that supports our pre-existing views (i.e. confirmation bias) and disregard opposing arguments.

This phenomenon affects individuals and businesses. And it has the potential to undermine democracy.

Misleading headlines

Given his global superstar status and vast social media reach, Cristiano Ronaldo’s actions moving the Coca-Cola bottles are likely to have implications.

However, a few hours after the Euro 2020 opener, a rash of articles had appeared all over the world suggesting that Ronaldo’s distaste for unhealthy Coca-Cola products had wiped out $4 billion of the brand’s value.

A slew of business publications echoed the thought. Many quoted the Spanish newspaper Marca, which had “analyzed the [Coca-Cola] data from the New York Stock Exchange.” Other outlets simply repeated the message without citations: Some commentators concluded that one man, from a relatively small country, could sink a US multinational. Others praised the taste-making power of influencers, and argued that more companies should elevate them in their marketing plans.

Yet so much of this conjecture was built on a shaky, if not false, premise

The incident reveals the importance of critical thinking for business leaders, and the reading public, especially now.

What else moves share prices?

It is true that Ronaldo, in front of the press, declined to drink the strategically-placed Coca-Colas on offer. It is also true that, by the time the press conference was over, Coca-Cola’s value was down $4 billion. However, there were other factors affecting the beverage giant’s stock price.

Some non-alternative facts:

• Coca-Cola has 4.3 billion shares, and closed on Friday, June 11, with a share price of $56.16 for a market value of $242 billion.
• On Monday, June 14, Coca-Cola opened lower, at 9:30 a.m. EST.
• At 9:40 a.m. EST, its stock price was $55.26 (down 1.6%) and the market value had dipped to $238 billion, $4 billion lower than the prior day.
• Cristiano Ronaldo moves the Coca-Cola bottles at 9.43 a.m. EST, and says “Água”.

It is a fact, then, that Coca-Cola’s market value was already down $4 billion by the time of Ronaldo’s snub. Instead, various factors which have nothing to do with CR7 explain the drop.

For instance, at 9.40 a.m. EST, the whole US stock market was trading low. Ford Motor Company was down more than $2 billion in market value.

Stock movements are often too complex to attribute to a single factor. Rather, they are vulnerable to “confounding events” that happen concurrently and whose relationship to each other is blurry.  

Another fact: On June 14, Coca-Cola shares became ex-dividend. This technical term is easy to understand. When you own company shares, you receive dividends on certain days. In Coca-Cola’s case, this date was announced more than a year in advance. Once Coca-Cola became ex-dividend, that dividend had already been distributed. Of course, on the day that stocks cease to carry dividend rights, share prices adjust mechanically to a lower number. In this case, the ex-dividend date happened to coincide with Ronaldo’s conference call.

A final fact. From the moment CR7 moved the bottles (9.43 a.m. EST), until the end of the Wall Street trading day, Coca-Cola’s share price went up $0.30, adding $1.3 billion in valuation to the company.

Why should we care?

Why should we care about the post-truth issue? Because the topic obviously extends well beyond sports and stock markets and can have severe, widespread consequences beyond a dented stock portfolio. Fake news, and cherry-picked information, can arise from simple mistakes made by inexperienced individuals. They can also be sophisticated and deliberate in their attempts to mislead. Lies spread rapidly, especially on social media, and can potentially deceive voters and business leaders, as well as being used to justify government policies. There is a clear danger to individuals, companies, societies, and even democracies

What can we do?

The first step is to recognize that we have these biases. Then we must understand how these biases affect how we view news. Finally, there are methodological steps one can take, to make sure we do not fall into these traps. To start, understand we live in a post-truth world. Do not accept a fact as data. Sometimes, even large-scale data is not enough, because there are issues regarding the quality of the data.

Storytelling is an important tool. And a lively story tends to make an argument more vivid. Still, we must be aware of the dangers of accepting a single story as hard evidence.