Why Is Coca-Cola (KO) Stock in the Spotlight Today?

Coca-Cola (NYSE:KO) is in focus today after Elon Musk tweeted about the company. Specifically, he tweeted, most likely jokingly, that he plans on buying it. Shares of KO stock were down in pre-market trading, but since markets opened, they have been spiking. Earlier this week, Twitter’s (NYSE:TWTR) board of directors accepted the Tesla (NASDAQ:TSLA) CEO’s offer to buy the social media platform out. Since then, internet chatter has turned to which company he should buy next.

Source: phloxii / Shutterstock.com

What’s Happening With KO Stock

“Let’s make Twitter maximum fun!” Musk tweeted last night. The billionaire seems to be doing that already. Indeed, he has been fanning the flames of social media since his Twitter offer was accepted. Yesterday evening, he tweeted the following:

As a result, Coca-Cola has been trending all morning. Although KO spiked by 1.3% within the first hour of trading, its gains have since stabilized. As of this writing, it is down 0.87% for the day. Although its current pattern does not hint at a rebound, it’s still early enough for the stock to reverse direction and start moving back up.

Why It Matters

Musk’s Coca-Cola tweet is, of course, a reference to the iconic soft drink’s original recipe. Launched in 1886 as a general ailment tonic, it did originally contain the drug. The “coca” part of its title is a reference to the coca leaf from which cocaine is made. The “cola” is in reference to the kola nut from which the drink got its caffeine. By 1929, the drug had been completely removed from the beverage.

It is a safe assumption that Musk’s tweet was made in jest. However, he may indeed be a fan of the beverage. In his tweet’s comment section, he issued a powerful endorsement for Coke.

This is exactly the type of attention that can drive up a stock in the short term. However, Musk’s tweet is not the only endorsement KO stock has received recently. CNBC’s Jim Cramer recently stated that he sees it as positive long-term investment after the company reported strong earnings for the previous quarter. As he noted, “Coca-Cola put on a clinic, showing you how a seasoned management team can overcome just about any challenge you might throw at them. That’s long-lasting strength. That’s a great stock to put away.”

What It Means

Is it likely that Musk would actually make a move to acquire Coca-Cola? Given how much the company is worth, it does not seem like it. Data indicates that in 2021, the company was valued at $87.6 billion. That’s more than twice what Musk paid for Twitter, and that deal got very complicated before an agreement was reached. One Twitter user cited the company’s $284 billion market cap as a reason that Musk wouldn’t be able to afford it.

All signs point to the fact that Musk’s tweet was not one to be taken seriously. However, it’s worth remembering that he expressed interest in buying Twitter in 2017, and the world also dismissed that as a joke. While his tweet certainly helped push KO stock into the green today, it won’t keep it there. The company’s strong earnings report might, though.

On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2022/04/why-is-coca-cola-ko-stock-in-the-spotlight-today/.

©2022 InvestorPlace Media, LLC