How Euro's Top Scorer Cristiano Ronaldo Apparently Wiped Off US$4 Billion in Coca-Cola (NYSE: KO) Stock's Market Value
Sudhan Pâ—Ź
Cristiano Ronaldo created history at the Hungary vs Portugal Euro 2020 match.
The Portuguese became the all-time top scorer at the European Championships after netting two goals in the dying minutes of the Group F opener.
Ronaldo has now scored 11 goals, ahead of France’s Michel Platini on nine.
Other than the record-breaking feat, what Ronaldo did a few days prior captured media attention too.
The Stunt on Coca-Cola
On Monday, Ronaldo was speaking at a press conference ahead of his country’s game against Hungary.
Placed in front of him were two innocent-looking Coca-Cola bottles.
Little did the Coca-Cola bottles know that Ronaldo was already eyeing them as he took his seat.
After sitting down…
…Ronaldo went on to pick up the two bottles, removed them from sight, held up his water bottle, and said in Portuguese, “agua”, appearing to encourage people to drink water instead.
According to news reports, Ronaldo’s move caused Coca Cola’s market value (also known as market capitalisation) to fall by almost US$4 billion.
Market capitalisation refers to a company’s share price multiplied by its total number of outstanding shares.
| Coca-Cola share price | Market capitalisation (based on 4.31 billion shares outstanding) |
|
|---|---|---|
| Before press conference | US$56.10 | US$241.79 billion |
| After press conference | S$55.20 | US$237.91 billion |
| Difference in market capitalisation | N/A | US$3.88 billion |
Market Value Decline ≠Earnings Decline
But of course, we won’t know for sure if Ronaldo was indeed the one who caused the fall in Coca-Cola share price, even if the media has cited the correlation.
You see, stocks bob up and down on a daily basis for a variety of reasons, some that can be totally unrelated to the company.
Also, a decline in Coca-Cola’s market value due to Ronaldo’s snub doesn’t mean that its future net profit will be affected, as that’s a function of Coca-Cola’s product sales (or revenue), operating expenses and so on.
Ronaldo is an influential figure, but he’s unlikely to have that much influence over Coca-Cola’s business in the long run.
Therefore, if you are an investor of Coca-Cola, you shouldn’t worry about this incident.
As Coca-Cola, one of the official sponsors of the tournament replied on Tuesday with a statement saying, “everyone is entitled to their drink preferences” with different “tastes and needs”.
Well played.
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