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What’s next for Bud Light stock after losing America’s top-selling beer title?

What's next for Bud Light stock after losing America's top-selling beer title?

In recent weeks, shares of the world-renowned beverage company Anheuser-Busch (NYSE: BUD), the owner of Bud Light, have experienced significant turbulence as a result of a highly controversial promotional campaign. 

The company’s engagement with transgender activist Dylan Mulvaney sparked an intense backlash, leading to widespread criticism from various quarters. The negative sentiment was ultimately reflected in BUD share price, with the stock losing significant value in recent weeks.

After 20 years, Bud Light is no longer a top brewer in the US

Furthermore, Bud Light also lost its status as the American top-selling beer, according to June 15 reports

Namely, a Mexico-based brewing company Modelo Especial was the top-selling beer in the US in May 2023, overthrowing Bud Light which held that position for more than 20 years. 

During the four weeks that ended on June 3, Modelo accounted for 8.4% of US retail beer sales, while Bud Light fell to the second position with 7.3%, the reports showed. The shift was also apparent in dollar sales, with Bud Light’s sales plummeting 24.4%, while Modelo’s rose 12.2%. 

The end of its 2-decade reign highlights how big of an impact the controversy has had on Anheuser-Busch’s brand and its investors. 

Bud Light stock price analysis

After getting battered a few weeks ago, Anheuser’s shares have somewhat recovered more recently, climbing more than 3% over the past week.

At press time, BUD shares were standing at $56.67, up 1.89% on the day. 

BUD 1-day price chart. Source: TradingView

Year-to-date, BUD lost around 6%.

Analysts at RBC Capital Markets expect the Bud Light brand to witness a 37% drop in its earnings before interest, taxes, depreciation, and amortization (EBITDA) – a widely-followed gauge of corporate profitability – and a 22% decline for Anheuser’s North American (NA) operations.

The company’s NA business is currently trading on 5.9 times its 2024 EBIDTA forecast, representing a 23% drop from the start of April, before the controversy emerged. 

Nonetheless, financial experts think the recent scandal was “a one-off and will not affect AB InBev’s business outside the US.” As a result, they slashed their price target on Anheuser’s Europe-listed shares to €69 and reiterated their ‘outperform’ rating on the stock

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