Coca-Cola raised its full-year forecast because people drank more Coke during the World Cup. The CEO went on CNBC to confirm that watching men kick a ball makes humans thirsty. Demand rose in every market. Every single one. Even the markets where they presumably have access to tap water.
The company sells diabetes in a can. It has done this for over a century. The formula has not changed. The product has not changed. Yet somehow the stock moves when the CEO says World Cup fans bought more of it. Retail traders will now spend the next six months analyzing whether the next soccer tournament will drive Q3 estimates. They will build models. They will create spreadsheets. They will project beverage consumption based on game schedules and heat indexes.
None of this matters. Coca-Cola sells the same thing it sold yesterday. It will sell the same thing tomorrow. The only variable is whether people got thirsty near a vending machine. That is the entire business model. Thirst plus proximity equals revenue. A finance degree is not required to understand this.
But some guy with a Robinhood account will read this headline and think he has discovered alpha. He will buy calls. He will tell his friends he is playing the sports marketing angle. He will check the FIFA calendar like it is an earnings report. Then the Olympics will happen and PepsiCo will sponsor something and his calls will expire worthless and he will post on Reddit about market manipulation.
The World Cup boosted Coca-Cola's brands the same way it boosted beer sales and hot dog sales and television sales. People consumed more while watching TV. This is not a business insight. This is barely a thought. The CEO could have said literally anything and the stock would have done the same thing it was going to do anyway.
Your technical levels do not care that Messi made someone thirsty.
Photo by James Yarema on Unsplash
Leave a Comment