Coke Stock Plummet

whereismyname
whereismyname

So I was looking at long term coke stock history and found that there was a devastating plummet in 1998, after which it took almost 20 years to recover back to $43.59. Does anyone know why that happened? It's like coke stock fell off a cliff, but I'm having a hard time tracking down the reason why.

All urls found in this thread:
https://finance.yahoo.com/q/is?s=AMZN+Income+Statement&annual
http://www.latimes.com/business/la-fi-lending-club-layoffs-20160628-snap-story.html
Stark_Naked
Stark_Naked

The company struggled with bloated costs, management upheaval, and a loss of focus on its core product, soda.

Raving_Cute
Raving_Cute

The stock's $87.94 high-water mark on July 14, 1998, still haunts company headquarters in Atlanta. The five-year decline that brought shares to $37 in March 2003 reflected the turmoil within, as the company struggled with bloated costs, management upheaval, and a loss of focus on its core product, soda pop.

bloomberg article

Booteefool
Booteefool

oh shit

farquit
farquit

@Raving_Cute
@Stark_Naked
Such a pathetic reason to lose shareholder value.

That being said I feel like there hasn't been a good corporate mismanagement scandal in a while, but it almost feels like apple might be heading in that direction soon.

Lunatick
Lunatick

@farquit
It was overvaluation, not mismanagement.

Profit and management issues were minor compared to the unsustainable 50 P/E mentioned in @Spamalot
. Note that this was when you could get 5-6% interest rates on Treasuries.

When P/E for such a huge company gets that bloated, the next 10-15 years are going to see either a drop (Coke) or stagnate until the earnings catch up (look at a chart for Wal-Mart for instance).

TreeEater
TreeEater

Ahh. I remember reading about this in Warren Buffett's biography 'The Snowball'. Roberto Goizueta, Coca-Cola's CEO, died in 1997 due to lung cancer. Douglas Ivester was named CEO. Within 3 years, he was out. Why? Earnings declined due to a stronger US Dollar from the fallout of the Asian Financial Crisis. Ivester was ambushed by Buffett and Herbert Allen during a trip to Chicago meeting with McDonald's executives.

Lunatick
Lunatick

@TreeEater
they got their shit together
now warren buffett is all in on coca cola

King_Martha
King_Martha

@whereismyname
coke
Here I am googling coal prices and coal derivatives, and you mean coca-cola company stock.

Be more vague, why dont you.

happy_sad
happy_sad

@Lunatick
Yep. Coca-Cola falling between 1998 and 2003 is the reason why Berkshire Hathaway underperformed during the Dotcom boom and people started criticizing the performance of the stock.

Buffett's son, Howard, is a director for Coca-Cola. He got thrown under the bus at ADM during the price fixing scandal.

haveahappyday
haveahappyday

@King_Martha
Be more vague, why dont you.

look at the image, why don't you.

w8t4u
w8t4u

Ayone else own pepsi here?

Need_TLC
Need_TLC

@w8t4u
Yes I do. Tbh, PEP is a better stock compared to KO if one has bought it in the last 5 years. Company does not derive a high percentage of their revenue from drinks. They're not as entrenched globally compared to Coca-Cola. Also Indra Nooyi is a great CEO even though there have been periods of harsh criticism in the business press.

idontknow
idontknow

@farquit
Just wait till Tesla and Solar City are exposed as money pits with no intent of ever turning a profit

hairygrape
hairygrape

@idontknow
you misspelled Amazon, fa/m

Crazy_Nice
Crazy_Nice

@King_Martha
I wrote the word "coke" without typos three times and had the picture. Given so much of the electricity in the world is coal powered a sudden drop like that would be impossible...

haveahappyday
haveahappyday

@Booteefool
Keks

CodeBuns
CodeBuns

@hairygrape
Amazon has a clear business model. All Elon Musk companies have murky business models that hide cash flow problems. Amazon generates enough revenue to never go under

Ignoramus
Ignoramus

@Crazy_Nice
lmao go look at any coal stock chart
pic related (Peabody) yes, that is 1500 as in $1500

Stupidasole
Stupidasole

lol the one black guy on my street growing up was an executive of some sort at coca cola

this was around the late 90s. not making this up, why would i.

Illusionz
Illusionz

@CodeBuns
they don't generate revenue
they break even

Fried_Sushi
Fried_Sushi

@Illusionz
thats definitely not what Im seeing here:
https://finance.yahoo.com/q/is?s=AMZN+Income+Statement&annual

Raving_Cute
Raving_Cute

@Ignoramus
I stand completely corrected. Take that solar

Lord_Tryzalot
Lord_Tryzalot

@Raving_Cute
it was brutal. I bought Peabody last year thinking $2.20 was a floor. It reverse split to $36 and I held all the way to zero. lol Thanks Obama

SomethingNew
SomethingNew

@Lord_Tryzalot
Man that's rough. Did you think it would be a more gradual transition towards renewable? or that regulations would relax? It's situations like these that make me so nervous about futures trading

Boy_vs_Girl
Boy_vs_Girl

@Stark_Naked
@Raving_Cute
kek

5mileys
5mileys

@SomethingNew
the thing is, coal use has barely dropped. Renewables havent really taken any market share and are still a meme, barely accounting for a few percent of electricity production. Natural gas has taken some market share.

Almost all energy companies overstretched themselves funding growth with debt during the last boom. so when natural gas prices dropped 80%, the price of coal naturally did too. That and Obama EPA's "war on coal" bankrupted literally every coal company in the U.S. They all could have survived if you look at their books they were never insolvent. The stocks were just shorted to zero until management gave up

w8t4u
w8t4u

@SomethingNew
The lesson is dont invest against political headwinds I guess.

StonedTime
StonedTime

@whereismyname
NEW COKE.

idontknow
idontknow

@farquit
Look at Valaent (VRX) and SUNE

They went crazy with acquisitions, company rotten to the core raising drug prices and have 30B debt

I do think they'll go back though and won't end up like SUNE

Carnalpleasure
Carnalpleasure

@farquit
That being said I feel like there hasn't been a good corporate mismanagement scandal in a while

Here you go user

http://www.latimes.com/business/la-fi-lending-club-layoffs-20160628-snap-story.html

The latest disclosures Tuesday, uncovered by a company investigation, found that in the last few weeks of December 2009, Laplanche and three relatives took out 32 loans for a total of $722,800. All but three of those loans were repaid in full over the next two months, implying they were taken out to artificially goose loan numbers.

It just gets better and better for Lending Club

New_Cliche
New_Cliche

@Carnalpleasure
Lending Club is like Zenefits. They're both horribly managed.

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