Benzinga - by Zaheer Anwari, Benzinga Contributor.
- McDonald's is in the midst of a controversy due to its Israeli franchisees providing free meals to the Israeli Defense Forces during their operations against Hamas.
- Financially, McDonald's stock has suffered, dropping 16% since July 2023, with a notable 5.31% of that decline happening this month.
- Q3 earnings release are scheduled for October 30, with projections at $3.00 per share.
The uproar began when it was revealed that McDonald's, through its Israeli franchisees, had been providing complimentary meals to members of the Israeli Defense Forces (IDF) during their operations against Hamas.
They initially shared their support on Instagram, highlighting their contribution of 4,000 meals to hospitals and military units, with plans to continue daily donations to soldiers on the ground and in drafting areas.
Unfortunately, McDonald's attempt to show unity ended up causing a major backlash.
Their Instagram post received swift and widespread criticism, leading McDonald's to delete it.
However, the damage had already been done, as the call for a complete boycott of McDonald's began to gain traction on Twitter.
This PR disaster comes at a terrible time for McDonald's, particularly given the recent decline in its stock performance.
Since July 2023, the stock has seen a significant drop of 16%, with a concerning 5.31% decrease occurring just this month.
Currently, the stock price hovers slightly below the critical $250 level, with indications of strong support in this region.
Investors are now anxiously anticipating the release of McDonald's Q3 earnings on October 30th.
Projections suggest earnings will be $3.00 per share. It is essential to highlight that Q2 earnings exceeded expectations, reaching $3.17 compared to the predicted $2.79.
Despite the positive news, the stock value continued to decline, therefore, there may be unexpected volatility regardless of the upcoming earnings release.
In the event of a continued decline in stock price, a significant safety measure is in place.
The safety measure comes in the form of the weekly 200 simple moving average support, currently standing at $239.
Breaking below this level could be a sign of more difficulties to come, while a bounce and recovery would suggest that the worst is over for now. Investors will have to apply patience and wait to see the outcome of the earnings release.
After the closing bell on Monday, October 16, the stock closed at $249.94, trading up by 0.66%.
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