An impulsive five-second gesture from one of the world’s fittest athletes Cristiano Ronaldo cost soft drink giant Coca Cola an unimaginable $4 billion. For most of us the entire incident has been hard to wrap our head around.
The star footballer is known for his fitness regime and super-disciplined diet. His preference of water over a soda drink overloaded with sugar doesn't come as a surprise.
But the fact that Coca Cola’s stock has been struggling ever since is a puzzling one. Does Ronaldo really have that much power? Or, is the recent dip in Coca Cola’s stock value triggered by other factors? The incident could even turn out to be the best publicity the beverage industry leader has witnessed in a while.
Here’s decoding the incident and what the snub by the star footballer means for the world’s most popular soft drink brand.
Why did the Coca Cola stock drop after Ronaldo’s water gesture?
In a Euro 2020 presser Ronaldo pushed aside two bottles of Coke, which were there because the company happens to be a Euro 2020 tournament sponsor. On Friday, Coca Cola's stock was trading at $56.16 at the time of market closing. On Monday morning, it was down 1.6 percent to $55.23 in an hour, which translated into a $4 billion loss in stock worth for the Coca Cola company.
Coke’s statement on the issue was neutral. It said that Ronaldo, like any other individual, was entitled to his own drink preferences as everyone has different "tastes and needs."
Some market experts suggest that the dip in Coke’s value isn’t just due to Ronaldo’s miffed gesture. The Coca Cola stock was already 0.9 percent below the Friday price on Monday morning, six hours before Ronaldo’s press conference drama began to unfold.
Furthermore, $4 billion would not make Coca Cola bosses bat an eyelid, with the beverage giants market cap still at $237 billion. The stock is not just expected to recover quickly but could even benefit from the publicity.
Good publicity for Coca Cola?
Billionaire entrepreneur Elon Musk has recently triggered similar trends in the market with his cryptic tweets. He once called his own company Tesla’s stock “too pricey.” That sent the EV giant’s value plummeting by $14 billion.
But while Ronaldo’s impact on Coca Cola mimics Musk’s antics with cryptocurrencies and the Tesla stock, Coke’s plight also mirrors that of GameStop and AMC stocks that were sent roaring by memes and speculations on the social platform Reddit.
Coca Cola has been witnessing similar “favourable mentions by such meme stock traders on Reddit.” On a leading finance website, Coke's ticker page was the top most trafficked page.
Moreover, Coca Cola is in a strong position for post-pandemic recovery as it recently told investors in April 2021. The volumes for the beverage giant are back to 2019 levels as of last March with people consuming more of the soft drink sitting at home amid the pandemic. In the last three months, Coke’s share value has increased by nearly 9 percent.
Coca-Cola Chairman and CEO James Quincey recently told a leading media house, "I think it's a great rebuilding of the momentum, getting back to pre-pandemic levels of volume in March. It's a testament to the work on the marketing, the innovation, working with our bottlers to execute. So it is really good momentum,".
