On April 1st 2023, Bud Light began a controversial ad campaign which immediately sent shockwaves through its loyal consumer base. As the outrage grew, it became abundantly clear that this may have a significant impact on the popular Bud Light brand, the #1 selling beer in America. In the ensuing 2 months, the share price of Bud Light’s parent company AB InBev (BUD), has fallen over 15%! The consensus on the street is that there is more downside pain for the stock price, and judging by the price chart, you wouldn’t be wrong. However, this may be an overdone knee jerk reaction to a botched marketing campaign. When you peel back the curtain to reveal the composition of AB InBev stock, it may be painting the picture of a great buying opportunity.
At first glance, the Bud Light reaction has been brutal. Social media is filled with unhappy customers destroying bottles, cans and kegs of Bud Light in open protest. Neilson Ratings says that as of May 6th, sales have dropped 23.6%. Undoubtedly this is going to hurt a company’s bottom line. But how bad? According to JPMorgan analyst, Jared Dinges earning will slide 26% this year and the current share price is pricing in a 45% drop in U.S. EBIT.
