A weather event sent a ripple effect across the chocolate industry.
Macroeconomic events matter and can affect even the bluest of blue chip stocks. Take Hershey's for example, the chocolate provider that until April 2023 was up +24% in 2023 and as of September 2023 was down -4% for the year.
In a word: disease. Seventy percent of the world's cocoa supply comes from West Africa where a plant disease called black pod disease has been spreading rapidly due to extremely wet weather.
The butterfly effect has raised the price of cocoa which will likely decrease profits of chocolate makers like Hershey's. Investors paying attention to rising cocoa prices and supply issues were selling Hershey's stock, driving down the price.
Following April, the price of HSY declined -28% as the price of HSY's most important ingredient, cocoa, has risen by 48% this year.
Because it's important to recognize that events impact the trajectory of stocks, and the trajectory of even the most bullish of company events. Share price movements are not mysterious and they don't only go up - they are impacted by events and if you're not tracking the events, it's hard to capitalize on the massive price swings.
Our analysts track these types of macro events and put them into context for our Level 2 members, making it easy to understand the relationship between events and prices.