UnitedHealth Group (NYSE: UNH), the parent company of UnitedHealthcare, has faced a significant stock price decline following the widely publicized fatal shooting of UnitedHealthcare CEO Brian Thompson.
On Tuesday, December 10, UnitedHealth Group’s stock closed at $565.19, down 7.80% over the past five days, a $47.81 drop. In pre-market trading on Wednesday, the stock showed a slight decline of 0.64%, trading at $561.58.
Initially, the news of Thompson’s shooting did little to impact UnitedHealth’s share price. However, shares plummeted more than 10% between Wednesday and Friday. The situation slightly stabilized on Monday, December 9, after the arrest of Luigi Mangione in connection with the incident, with the stock climbing from $551.43 to its current price above $561.
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Analysts are now assessing whether UnitedHealth Group’s operating environment will face longer-term challenges due to the incident and subsequent backlash.
Jefferies analyst David Windley expressed confidence in UnitedHealth’s resilience, which helped the stock recover by 2.4% on Monday and an additional 0.12% on Tuesday. Nevertheless, the broader implications of the incident have left investors cautious.
Professor of finance and economics weigh in on UNH stock
Laura Veldkamp, a professor of finance and economics at Columbia University, told Newsweek the drop in stock value by highlighting the risks associated with negative public perception.
“If you create these bad effects for people, for the environment… you create risks. It might not show up in your profit immediately, but it creates the risks of backlash, the risks of regulation, the risks that your consumers may one day wake up and decide that we don’t want to engage with a company that does this to us anymore.”
She further added:
“Maybe this drop in stock price will help convey to shareholders that they too will lose if stakeholders aren’t taken into account.”
Meanwhile, institutional investors are adjusting their positions. It has just been revealed The Teachers Retirement System of the State of Kentucky reduced its stake in UnitedHealth Group by 16% during the third quarter, selling 38,898 shares, leaving them with 204,264 shares, as per the latest SEC filing.
UnitedHealth’s struggles in the wake of Thompson’s murder underscore the delicate balance between corporate reputation, stakeholder interests, and shareholder value, while the company’s fundamentals remain solid, the long-term impact of this event and the ensuing backlash remains uncertain.
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