In pre-market trading Wednesday, shares of the fast-food giant plunged 6.73% to $293.50, marking a sharp decline from the previous day's close of $314.69.
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00:00McDonald's, this hit the tape yesterday right after the close that McDonald's is dealing
00:07with an E. coli outbreak in multiple states across 10 states.
00:11There has been one fatality in Colorado.
00:14So this was linked to, I think they were saying the quarter pounder patties.
00:20And so McDonald's has pulled those, the quarter pounders off the menu in certain states.
00:25As soon as this news hit the tape, I went and checked the stock, it was down 10%, which
00:31is about $25 billion worth of market cap was being wiped off of McDonald's on this news.
00:40At the time, I was like, it seems like kind of an overreaction and the stock did end up
00:43getting bought back.
00:44So it got as low as, let's see, around 285, it looks like, or a little bit below 285,
00:53and then got bought all the way back up to almost 300, 296.50, and then came back down
01:00a little bit.
01:01So either way, we're off the lows from when that news hit the tape yesterday, but still
01:05trading down more than $21 this morning, around 7% on McDonald's.
01:12I was all over this too.
01:13It actually was interesting because Starbucks reported earnings, SBUX, and they did preliminary
01:21numbers.
01:22Starbucks got absolutely hammered there too.
01:24Starbucks trade under $90 on the number, started popping back.
01:29And then it's like, so you had all these reports they're supposed to report, but then you had
01:32this random Starbucks news, it's like, holy crap, you know, this is out of nowhere.
01:35So I'm going to Starbucks, I'm just trading it a little bit.
01:38And then bang, McDonald's down 25 in like a split second.
01:43I was like, what the hell just happened?
01:47Did they announce guidance?
01:49Did they do preliminary numbers too?
01:53And then I see the headline.
01:54I'm like, holy shenanigans.
01:55Obviously, when we see E. coli, you know, the algos hit first, ask questions later.
02:00And it was down so fast, you don't realize how quick those algos are.
02:04And some of them made some money.
02:06So not all the algos are dumb.
02:07The algos there were pretty damn smart because they hit every single bet, 313, 312, 311,
02:13310, 300, just killed it.
02:14So they made a lot of money.
02:15So as much money as they lose, maybe chasing on some of these, the algos made a lot of
02:19money on that.
02:20That E. coli algo is a no-brainer.
02:22You see a stock, CDC come out and say, McDonald's linked to E. coli, sell immediately, and that's
02:28what happened.
02:29Now, again, did they overshoot?
02:31Absolutely.
02:32Was it an overshoot probably down to 282?
02:35Probably.
02:36I mean, stock's now up at 293.
02:37Is the story over or do we get more cases and then it starts to get whacked again?
02:41I mean, coming in here on day one is always a dicey thing, and it was the dicey onions
02:46that actually caused this to happen.
02:48So they're saying it wasn't the meat because when they originally hit this, and there was
02:52so many repercussions to think about, Tyson Foods, because they're a food supplier there,
02:57started getting smacked hard too.
02:58But then they said it was the onions.
03:01And when they said it was the onions, then Tyson started bouncing back.
03:04They had Beyond Meat, Joel.
03:06Beyond Meat had this huge rally on this because, oh my gosh, you're never going to eat meat
03:10at McDonald's again.
03:11They're all going to have to go to the Beyond Meat burgers.
03:14And it popped it over to 720.
03:16Beyond Meat was up like 15% on this headline.
03:20And then they said it was the onions.
03:22And they're like, oh my gosh, sell Beyond Meat.
03:24They're going to still eat the patties, they can't eat the onions, sell, whatever, sell,
03:29sell.
03:30And they're hitting Beyond Meat.
03:31And then they're like, well, they're not going to eat at McDonald's, they're going to eat
03:34at Wendy's.
03:35And Wendy's starts popping off.
03:36And I was all over that one because I bought Wendy's flat at 19 and was able to flip it
03:40out just after that one.
03:42Other food stocks were popping.
03:43QSR is up here this morning, DRI was popping.
03:47There was all kinds of different food stocks popping because if they're not going to eat
03:50at McDonald's, they've got to eat somewhere.
03:52Buy the other ones.
03:53But who's got those onions?
03:54That's what I want to know.
03:55Wow.
03:56Dennis, that might be one of your top five rants of all time.
04:01That's how it went down, Joel.
04:04You just went from McDonald's to Wendy's to Beyond Meat.
04:10QSR.
04:11What else did you bring in there?
04:12So many stocks.
04:13I have them all.
04:14Oh, my God.
04:15Lamb Western.
04:16I did mention Lamb Western.
04:17Who's the onion supplier?
04:18Food supplier.
04:19Real quick here.
04:20Wow.
04:21A lot of comments on this.
04:22I don't think they're going to be nearly as good as Dennis's.
04:27Look where this thing got to.
04:29This thing had a gap up day, probably earnings, and it had a big old gap between 79.50 and
04:3681.72.
04:37Didn't quite get to the low that day.
04:41But it got to 282.22.
04:44282.22.
04:45So, man, I mean, you came back.
04:50This incredible run, Joel, from 260 to 320, this incredible comeback story in McDonald's,
04:58it came back half of it in like 10 minutes.
05:01But you had three months to go up in 10 minutes because of, you know, a bunch of dicey onions.
05:07The stock gives back half of it.
05:09That was definitely, to AB's point, probably an overshot it.
05:12Now, again, if we start hearing, and remember, we have precedence here on the Chipotle.
05:17Yes, we do.
05:18They couldn't stop.
05:19It takes years.
05:20And it started popping up over here and started popping over there.
05:23If we get, you know, expanded area, let's say to another part of the country or something
05:27like that, the stock is going to get hit.
05:30So as long as they keep it contained, we might have a couple more cases, that's going to
05:34be okay.
05:35As long as it's contained into that little geographical area.
05:39But if it starts spreading across the country, like we start seeing about, you know, in Detroit,
05:44oh my gosh, there's the dicey onions and E. coli case in Detroit from McDonald's, I mean,
05:48then McDonald's would have problems.
05:50But that's just me.
05:51I'll shrug it off.
05:52I don't think the stock is coming right back.
05:53But it definitely overshot at 282, at least for the information we currently have.