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Why Boston Beer Shares Fell 10% in November

By Demitri Kalogeropoulos - Dec 8, 2020 at 2:52PM

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The stock took a breather from its 2020 rally last month.

What happened

Boston Beer ( SAM 0.97% ) shareholders lost ground to a surging market in November as their stock dropped 10% compared to the 11% increase in the S&P 500, according to data provided by S&P Global Market Intelligence.

The slump erased just a small portion of recent gains for investors, though, and the stock remains higher by over 130% in 2020 as of this writing.

Two people clinking their glasses of beer

Image source: Getty Images.

So what

While the alcoholic beverage specialist didn't issue an operating update last month, investors still received some important industry data. Demand trackers like Nielsen reported strong at-home demand for beer and hard seltzers through November as the bar industry remains pressured by COVID-19. Hard seltzer is in especially high demand, which is good news for Boston Beer and its popular Truly brand. However, that positive new wasn't enough to keep the stock's 2020 rally running last month, as investors apparently took some gains off of the table.

Now what

The hard seltzer spike should continue offsetting slumping demand for craft beers, even though Boston Beer is enduring rising expenses as it shifts production toward that product. Those trends mean Wall Street will be focused on metrics like operating profit margin -- in addition to core growth trends -- when the company reports fiscal fourth-quarter earnings results in mid-February.

Currently, investors are expecting heady growth figures in that report, with Q4 sales projected to jump over 50%. That metric will tell investors more about the chain's operating prospects than any short-term stock price slump.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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