Though Coca-Cola (NYSE: KO) has, overall, been doing well in 2024, its recent stock market fortunes have been somewhat lackluster.
Specifically, despite KO shares being, at press time, 6.95% in the green year-to-date (YTD), they plummeted 9.04% to $64.06 in the last 30 days.
The selling activity has been so prevalent, in fact, that Coca-Cola stock is, as of the pre-market on Monday, November 11, the most oversold it has been since October 2023.
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Looking at the historical chart reveals that KO shares hit their latest bottom just over 13 months ago. The same long-term chart reveals that, should similar action take place, Coca-Cola stock could be in for a major and protracted rally.
Could Warren Buffett make or break Coca-Cola stock rally?
One upcoming event likely to affect KO stock’s future movements is the 13-f filing for Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A, BRK.B), which is expected to be made public in mid-November.
‘The Oracle of Omaha’ has been invested in the beverage giant for years. At the end of the second quarter of 2024, Coca-Cola was the fourth-biggest holding of his portfolio, at 9.1% and 400 million shares held.
While a stagnation or a minor increase of the stake is unlikely to alter KO stock’s next moves, the soft drink shares could probably experience major headwinds should Buffett signal a loss of confidence by offloading a significant quantity of the shares.
Why a KO stock surge is likely
Still, barring a Warren Buffett intervention, Coca-Cola stock’s status as oversold indicates that many investors – and particularly those keen to take advantage of the company’s 3.04% annual dividend yield – could try to ‘buy the dip.’
KO shares’ recent downward correction further reinforces such a notion, as it is one of the few prominent stocks that have yet to participate in the Donald Trump victory rally.
Why Coca-Cola shares might still be in trouble long-term
Finally, though a short-term rally on the back of the broader stock market surge and KO stock’s recent correction is likely, there is much uncertainty over the shares’ long-term performance.
The Coca-Cola pullback was itself driven primarily by a concerning report that demonstrated, despite beating analyst forecasts, a diminishing of the company’s growth.
Perhaps the most concerning figure – even if bullish at the time – was the 10% price-mix revenue surge. This figure effectively indicates Coca-Cola has been benefiting from raising the prices of its products, which may not be a sustainable strategy as hikes start becoming less justifiable as the inflation rate comes down.
Furthermore, the broad 1% drop in sales could indicate that consumers are moving away from the soft-drink giant for various reasons.
For example, Coca-Cola is not only pressured by lower inflation, which means price rises will slow down but the cost of living will not decrease and will continue affecting consumers’ purchasing power, but also by the increasingly prominent health concerns around its – and many other – products.
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