The myth of $4 Billion

The myth of $4 Billion

Cristiano Ronaldo, during a press conference before Portugal’s Euro 2020 football championship opener moved two bottles of Coke from his desk and held up a bottle of water, underlining his preference by declaring: “Agua” with a smile to the journalists. The media outlets across the world have reacted to this playful gesture by the Portuguese football superstar by publishing a barrage of news articles stating “An impulsive five-second gesture from one of the world’s fittest athlete Cristiano Ronaldo representing Juventus in Serie A costs soft drink giant Coca Cola a whopping $4 billion drop in their valuation”

The star footballer is known for his fitness regime and super-disciplined diet which clearly reflects his preference for water over soda drinks overloaded with sugar. The entire act of Cristiano Ronaldo rejecting Coca Cola for water was aimed at setting a positive example for young fans as well as showing his disassociation for cynical marketing looking to link him with a carbonated fizzy drink. Even in his personal life, he expressed his staunch refusal towards his son’s consumption of a Coca-Cola or a Fanta bottle. On top of it, Ronaldo did get appreciated by anti-obesity campaigners as it helped in highlighting the negative impact of junk food producing corporations sponsoring sporting events.

Some industry experts suggest that the dip in Coke’s value couldn’t be attributed due to Ronaldo’s 5 second shenanigan. In fact, as per insiders, this incident could even turn out to be the best publicity the beverage industry leader Coca Cola as well as the industry as a whole has witnessed in a while. On Friday, Coca Cola's stock was trading at $56.16 at the time of market closing with a market value of $242 Billion. On Monday morning at 9.40 AM, it was down 1.6 percent to $55.23 in an hour, which translated into a $4 billion loss in stock worth for the Coca Cola Company. Now, here’s the interesting fact – Ronaldo moved those Coca Cola at 9:43 AM, 3 minutes after the 1.6% drop. This means that Coca-Cola’s market value was already down before Ronaldo’s snub. Also, from the minute CR7 moved the bottles (9.43 a.m. EST), until the end of the Wall Street trading day, Coca-Cola’s share price went up to $0.30, adding $1.3 billion in valuation to the company.

Share prices are vulnerable to “confounding events” that happen concurrently and whose relationship to each other is blurry and difficult to comprehend. Another fact to be taken into consideration is that on the day of this incident, the shares of Coca Cola became ex-dividend which was announced a year back. Once Coca-Cola became ex-dividend, that dividend had already been distributed and the day when stocks cease to carry dividend rights, share prices adjust mechanically to a lower number indicating a fall in share prices.

Moreover, Coca Cola is in a strong position for post-pandemic recovery as it recently told investors in April 2021. The volumes for the beverage giant are back to 2019 levels as of last March with people consuming more of the soft drink sitting at home amid the pandemic. In the last three months, Coke’s share value has increased by nearly 9 percent.

Treating Ronaldo’s miffed gesture like sports equivalent to Musk’s antics with cryptocurrencies and the Tesla stock denotes the importance of storytelling to make an argument more vivid. The entire conjecture was built on a shaky, if not false, premise revealing the importance of critical thinking for business leaders and the reading public. The entire narrative of ‘whether one man, from a relatively small country, could sink a US multinational’ is pretty absurd and pointless.

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