McDonald’s Stock Drops 5% After An E. Coli Outbreak
McDonald’s (MCD) Stock sustained a drop of about -5% following a CDC report which suggested that the Quarter Pounder hamburgers from McDonald’s may have caused an E. coli outbreak in some states, with most cases being in Colorado and Nebraska. The stock consequently plummeted -10% in after-hours trading on Tuesday when the news became known.
The CDC reported that McDonald’s cut the use of fresh slivered onions and quarter-pound beef patties in specific states while they investigated the virus source. Health officials have recorded one hospitalisation and one death across 10 states to date.
“McDonald’s has quickly responded, with North America’s chief supply chain officer, Cesar Piña, saying that the outbreak may be related to slivered onions from a single supplier. However, the company has already taken a decision to stop the distribution of slivered onions in the affected areas. At the same time, local restaurants have been instructed to remove the ingredients from their kitchens to ensure the safety of the public,” Piña explained.
The fast food company will temporarily suspend the Quarter Pounder burger sales in the aforementioned states of Colorado, Utah, Wyoming, Idaho and Nevada. There are no changes to the rest of the items on the menu.
The reaction from investors is very strong with food safety concerns. For this reason, it can also have a damaging effect on a company’s reputation and its financial situation in the long run. However, the problems of the stock have been resolved to a certain extent due to the strategic and effective steps McDonald’s took. Still, the conclusion of the ongoing investigations and the outbreak’s resolution will be the next task that will determine the stock’s trend.
McDonald’s Stock Chart Analysis
MCD/USD 15-Minute Chart
Turning to the McDonald’s (MCD) stock trend, the gaps in the market became more dominant due to the E. coli outbreak associated with the Quarter Pounder burgers. A chart shown, which is quite telling, shows that we went through a sharp bust when the stock, due to strictness of trading regulations, reached a low of $290.88 on October 23, which is very close to the release of the news. Parting from the previous high of $310, the above was a sharp decline indeed, which had mostly remained above $310.
However, in addition to the sharp depreciation, the stock also made a quick recovery, jumping back up to the price of $299 per share. However, it is having trouble breaking through the $300 mark, which indicates that investors are still hesitant.
At present, the stock trades almost flatly between $296 and $299, with prices jumping between these two levels. On the one hand, some investors see the downward price movement as a buying opportunity, but on the other hand, many potential buyers remain reluctant to buy due to the ongoing CDC examination.
Remarks about solving the crisis or officially confirming that the infection is being contained could result in a stock bounce. Conversely, if we find out more negative news, we will be under even more pressure to sell. We will need to pay the most attention to the developing situation as it becomes clear.
If you are thinking of investing in McDonald’s (MCD), it’s best to follow the stock market situation. After a rapid decline, the stock has stopped fluctuating, and this could be a good time to buy after better news.
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