Coca-Cola shares fall to 52-week low, heading for worst year since 2008 | spcilvly

Over the years, Coca-Cola (NYSE: KO) has earned its place as a highly prized choice among investors due to its unmatched position in the beverage industry.

The company has consistently delivered impressive financial metrics characterized by solid profit margins and substantial cash flows. Additionally, Coca-Cola has established itself as a reliable income investment by consistently increasing its dividend payout for 60 consecutive years. It’s no surprise that this iconic stock has long been a prized asset in Warren Buffett’s portfolio.

However, 2023 has been far from kind to Coca-Cola. The company’s performance continued to deteriorate and on Thursday, October 5, its shares hit a new 52-week low, after a drop of 4.8%.

KO 1 year price chart. Source: Finbold

What is happening with Coca-Cola shares?

Coca-Cola’s latest pullback on Thursday comes amid a broader sell-off in the soft drink industry, with Pepsi (NASDAQ: PEP), Monster Beverage (NASDAQ: MNST) and others seeing similar declines that day.

There is a possibility that the sale was motivated by concerns that weight-loss drugs such as Wekovy and Ozempic are encouraging customers to control their grocery spending and consume fewer calories.

Walmart (NYSE: WMT) CEO John Furner said medications are causing a “slight pullback in the overall basket.”

“Just fewer units, a little less calories.”

– Furner added.

But from a broader perspective, Coca-Cola’s poor performance in 2023 is mainly due to a struggling consumer staples sector.

Last year, consumer staples were among investors’ favorite categories to seek refuge from four decades of inflation and market volatility. However, when those risks began to subside in 2023, the sector began to experience a mass exodus of investors.

The Consumer Staples Select Sector SPDR Fund (XLP) lost just 3.3% in 2022, which is a significantly better performance than the SPDR S&P 500 ETF Trust (SPY), which fell about 19% last year.

This year, however, things have changed: XLP fell more than 8%, while SPY posts gains of 12.7%.

SPY vs XLP in 2023. Source: PortfoliosLab

In addition, other factors, such as slowing sales of beverages and household products, also contributed to Coca-Cola’s decline. The slowdown comes as companies begin to lose pricing power amid cooling inflation.

Coca-Cola stock price analysis.

At the time of this publication, Coca-Cola shares were trading at $52.38, down 6.7% for the week and down more than 11.5% over the past month.

So far this year, Coca-Cola has lost about 17.6%, heading for its worst year since 2008. KO is one of the worst-performing Dow Jones Industrial Average (DJIA) stocks in 2023.

KO YTC price chart. Source: Finbold

However, KO remains one of analysts’ top picks in the beverage industry. The company reported better-than-expected second-quarter earnings and sales and raised its full-year guidance. Additionally, Coca-Cola’s average selling prices rose 10% in the second quarter, despite a modest decline in U.S. unit volumes.

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