Benzinga - by Zaheer Anwari, Benzinga Contributor.
- McDonald's is boldly increasing its stake in its China business to nearly 50%.
- The strategic move includes acquiring a 28% stake from investment firm Carlyle.
- McDonald's stock has seen a rise of 6% year-to-date.
While many multinational corporations are reducing their investments in China due to various geopolitical and economic issues, McDonald's is making a strategic move to own almost half of its China operations.
This decision demonstrates McDonald's confidence in the future growth of the Chinese market.
The company acquired a 28% stake in the China business from investment firm Carlyle, and the number of McDonald's stores in China has doubled since 2017, now totaling 5,500.
This rapid expansion is a testament to the brand's adaptability and popularity in the Chinese market. Additionally, McDonald's has set an ambitious target of surpassing 10,000 stores in China by 2028.
This expansion plan is supported by solid performance metrics, with the business experiencing over 30% sales growth since September 2019.
These figures demonstrate McDonald's's strong foothold in the Chinese market and its potential for further growth.
The financial markets have welcomed McDonald's strategic moves and overall performance with enthusiasm.
The company's stock has shown notable strength, delivering a 6% increase in value year-to-date.
Particularly noteworthy is the stock's achievement in July 2023, when it reached an all-time high, falling just $1 short of reaching $300.
This level represented a significant psychological barrier, causing a 17% decline when it failed to pass this obstacle.
However, McDonald's stock exhibited resilience and power, rebounding impressively in October and enjoying a nearly 7% increase in November.
Looking ahead, the stock is about to face a major resistance level at $281. This level marks the high of 2022.
The question is whether the stock can overcome this hurdle and make another attempt at the $300 resistance level.
The stock's current momentum seems strong, and if it maintains this trajectory, it may break through these critical levels.
The performance of the stock not only reflects its financial health but also serves as an indicator of investor confidence in McDonald's strategy and growth potential, especially in the Chinese market.
After the closing bell on Tuesday, November 21, the stock closed at $280.47, trading up by 0.52%.
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