Anheuser-Busch (NYSE:BUD) is a US-listed stock that’s one of the largest brewing companies in the world. It owns such brands as Stella Artois, Beck’s and Budweiser. Over the past week, there has been a lot of activity around Anheuser-Busch shares, with the price down 5%. Given the amount of media coverage of the business, I want to see if this is the right time to buy or not.
Chatter about marketing
The main reason people are talking about the company is due to a marketing campaign launched at the start of this month. It involved the Bud Light brand collaborating with a transgender social media influencer.
Even though the company works with various social media stars to promote beer, using this particular influencer has sparked quite a backlash from some people (as well as praise from others).
It’s unusual for a marketing campaign to materially influence the price of the stock, but the drop this week is being attributed to this. Investors are concerned that some of the negative coverage around this and how it has been dealt with is damaging to the firm. Not only this, but with various boycotts in place of Anheuser-Busch brands, it could start to hurt revenue.
Implications from here
It’s too early to tell what impact all of this news coverage will have on financial performance. Over the last year, the company has been performing well. Its latest report started by saying that “we delivered all-time high full-year volumes.” This helped full-year revenue to increase by 11.2% from 2021.
Given that we’re talking about a large company with revenue last year of $57bn, it’s hard to see how boycotts of the brand can make any meaningful dent in finances.
With global beer brands sold around the world, it’s a well-diversified business that isn’t solely reliant on one market. This should help minimise the fallout from the marketing campaign, as the friction appears to be coming more from developed markets like the US.
However, the one intangible factor that could continue to weigh Anheuser-Busch shares down is the reputational hit. I’ve seen it many times where a sound business can have a sharp drop in the share price simply due to a negative report (whether justified or not).
Actions from here
But does the price fall represent a buying opportunity? I don’t see value for investors buying the stock now based on just a 5% drop. Yet it’s definitely a stock I’m putting on my watchlist. I don’t think it’s unrealistic to expect it to continue to drop over the next week or so. If this story causes another 5%-10% fall, then I think it’s one worth buying for the long term, for when one marketing campaign is a distant memory.
After all, this is a fundamentally strong business. I don’t see how this story will be able to cause lasting damage to the brand.
