The stock price of McDonald’s Corporation (MCD) has risen up by over 1.86% today till the late morning trading session. Since the open on last Tuesday, the stock price of McDonald’s has fallen by over 10%. The stock closed at $148.27 on Friday.
McDonald’s is a fast food company that was founded in 1940 as a restaurant operated by Richard and Maurice McDonald, in San Bernardino, California, United States. They rechristened their business as a hamburger stand. The first time a McDonald’s franchise used the Golden Arches logo was in 1953 at a location in Phoenix, Arizona. In 1955, Ray Kroc, a businessman, joined the company as a franchise agent and proceeded to purchase the chain from the McDonald brothers. McDonald’s had its original headquarters in Oak Brook, Illinois, but has approved plans to move its global headquarters to Chicago by 2018.
Despite beating the likes of KFC, Burger King, Subway and Starbucks in the Business Benchmark on Farm Animal Welfare, the fast food chain has been warned they still need to make improvements. No fast food company achieved the ‘tier one’ status in the ranking but McDonald’s, which feeds 68 million people every day, placed towards the top of tier two after making farm animal welfare a part of its business strategy. World Animal Protection chief executive Steve McIvor said: ‘Consumers are showing that they increasingly care about the welfare of animals when they are deciding where to eat. McDonald’s have made some strides to improving conditions for farm animals in certain markets.
According to the numbers, people have not been buying from the new dollar menu from McDonald’s. And that’s hurting McDonald’s, the world’s second-largest restaurant chain, to the tune of billions of dollars. So much so, that McDonald’s just suffered the worst day in its entire history, at least by one metric: the total dollar drop and reduction in value that its stock lost in just one day of trading. The company is still worth $118 billion, so that means it lost enough value that theoretically you could have bought its much smaller competitor Wendy’s with the amount of the loss, and had a lot left over.
That drop makes this reportedly the biggest one-day dollar decline the restaurant has ever suffered, at least going back to 1972 when data was first tracked. Meantime, it’s been a rough two months so far. Traders who bet against McDonald’s stock by short selling it have made almost $200 million this year, according to another report.
The reason behind the drop is twofold, according to analysts: First, slow sales of the new “$1 $2 $3 Dollar Menu.” They expected it to boost the top line, and it’s just not working. Second, an influential analyst’s report that spelled out not just how “disappointing” these sales have been, but also how the big marketing investment in this revamped menu item may have had a ripple effect that hurt sales of other menu items, too.
Our analysts have given a “BUY” rating to McDonald’s stock. The correction faced in its price by a drop of 10% in the past week shows a predicted short term fall and is expected to rise again. The current holders of this stock are advised not to sell it yet.