Please ensure Javascript is enabled for purposes of website accessibility

Why Coca-Cola Stock Is Up (Only) 5% Today

By Rich Smith - Mar 24, 2020 at 2:33PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Coke won an upgrade, so why isn't its stock up even more?

What happened

Stock markets are on fire today, with hopes for a financial relief package out of Washington helping to lift the S&P 500 more than 7% as of 2:55 p.m. EDT. Curiously, though, Coca-Cola (KO 1.88%) stock is not one of the bigger winners, up only 4.7%.

So what

The situation with Coca-Cola only becomes more curious when you learn that this morning, the stock won an upgrade to buy from investment banker HSBC, which assigned the shares a $45 price target promising more than 14% upside from present prices.  

Man climbing blocks carrying a small stock arrow as another man standing on a percentage sign shouts at him

Stocks are running higher. But why isn't Coke stock running faster? Image source: Getty Images.

Why isn't Coke stock up more than the average today? Ask the CEO.

Speaking to CNBC today, Coca-Cola CEO James Quincey warned investors that although his company has seen "explosive growth" in grocery sales of its products, especially bottled water, reports, the growth in "at home" sales won't be enough to completely offset sales of "away from home" drinks (e.g. sales at restaurants). As a result, Coke expects to see at least some "financial impact" when it reports second-quarter 2020 earnings.

Now what

In related news, Quincey told CNBC that in order to avoid losing skilled employees, Coke will not be restructuring to lay off employees in the midst of this crisis. That could mean more short-term financial pain for the company, if it continues paying workers who may be confined to their homes by government decree and cannot actually work.

In the long term, however, demonstrating loyalty to employees could pay off for Coca-Cola, and ensure that once this crisis passes, the company has the employees -- and the loyalty of those employees -- needed to take full advantage of the rebound from recession.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Coca-Cola Company Stock Quote
The Coca-Cola Company
$63.04 (1.88%) $1.16

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.