Retail giant Target is facing a class action lawsuit from shareholders who claim the company misled investors about the risks of its DEI initiatives, leading to consumer boycotts and a dramatic drop in stock value.
The lawsuit, filed by the City of Riviera Beach Police Pension Fund, alleges that Target’s board and executives misused investor funds to advance social and political goals while failing to properly disclose the potential business risks associated with their DEI efforts.
The lawsuit states that Target’s stock price plummeted 22% on November 20, 2024, wiping out nearly $16 billion in market value after the company reported lower-than-expected earnings. The plaintiffs claim that this decline was a direct result of public backlash against Target’s DEI and Pride initiatives, which had already been controversial in previous years.
Target first faced backlash in 2023 after introducing “tuck-friendly” swimsuits and home decor items featuring LGBTQ+ themes as part of its Pride Month campaign. The controversy led to calls for a boycott, with executives reportedly holding emergency meetings to prevent a “Bud Light situation”—a reference to Anheuser-Busch’s financial struggles following a similar backlash over a marketing campaign.
As a result, Target’s sales declined 5.4% in Q3 2023, marking the first sales drop in six years. According to the lawsuit, the board failed to disclose these risks and instead focused solely on the potential consequences of not adopting DEI policies, rather than the backlash they might generate from conservative consumers and investors.
The lawsuit further claims that Target executives, including CEO Brian Cornell, knowingly concealed the risks associated with their 2023 and 2024 Pride campaigns, misleading investors into purchasing stock at inflated prices. The plaintiffs argue that Target’s board only considered risks from progressive advocacy groups while ignoring concerns from shareholders and consumers who opposed DEI mandates.
Additionally, the lawsuit asserts that nonprofit organizations pushing for DEI policies did not represent real consumer threats but were rather used as justification to implement sweeping changes that negatively impacted the company’s financial health.
Earlier this month, Target announced that it would be ending its three-year DEI goals, a move that has since been met with backlash from progressive leaders. Civil rights attorney Nekima Levy Armstrong criticized the decision, calling it “cowardly” and accusing Target of “bowing to the Trump administration.”
As President Donald Trump continues his crackdown on DEI initiatives in the corporate and federal sectors, companies like Target have faced mounting pressure to either scale back or eliminate their diversity programs. While some corporations, such as Costco, have doubled down on their DEI commitments, others—like McDonald’s, Walmart, and Amazon—have opted to roll back or quietly restructure their initiatives.
