Anheuser-Busch InBev (BUD) is grappling with the aftermath of a boycott targeting its products, notably Bud Light, leading to investor apprehension. The shares of the company have been on a downward spiral for five consecutive days, marking the longest losing streak since April 10, with a 6.8% decrease during this period. Should the stock continue its downward trajectory, it will record the worst five-day loss since September 27, 2022, when the stock plummeted by 8.2%.
The turmoil surrounding AB InBev originated this spring when its Bud Light brand teamed up with transgender actress and social media influencer Dylan Mulvaney for a promotional campaign. This collaboration ignited a call for a boycott from conservative groups, thereby causing anxiety among investors regarding the potential influence on the company’s financial health.
Initially, the stock saw a negligible impact and even witnessed a surge after AB InBev posted robust earnings. Nonetheless, the recent downturn signals escalating worries tied to the boycott. Even though the Q1 results were favorable, they did not completely encapsulate the ongoing controversy, given that Mulvaney’s video was released on April 1, coinciding with the beginning of Q2. Despite a commendable performance year-to-date, the stock peaked on March 31.
Investors are now apprehensive that Bud Light’s declining sales volumes may necessitate a revision of the company’s outlook. Although AB InBev is a global company with a diverse product portfolio, it seems that the boycott is also starting to impact some of its other brands. Despite management efforts to address concerns, investor worries have not subsided.
It is worth noting, however, that analysts have not significantly adjusted their earnings estimates. According to FactSet, second-quarter earnings-per-share estimates have only decreased by 1.1% in the past week but are still up by 5% over the past month. Consensus estimates for the full year have seen a minimal decline of just 0.1% in the past week and remain unchanged over the past month.
While the Bud Light boycott may have some cultural impact, it may not yield the desired results for conservative groups. Rival company Molson Coors Beverage has actually benefited from the situation, witnessing growth in sales volumes for its brands as Bud Light’s sales decline. Molson Coors also emphasizes its long-standing support for LGBTQ+ causes on its website, highlighting a different approach to societal issues.
The future implications of the boycott on AB InBev’s performance and brand reputation remain uncertain. Investors will closely monitor the company’s response and whether it will need to adjust its outlook in light of the ongoing controversy.
©traders-news.online
