Only Off By $4bn, or Roughly 100%
Did soccer demigod Cristiano Ronaldo really bend Coke's stock price like one of his infamous free kicks?
A quite short story today, just to illustrate how major outlets can invent and echo fictional narratives with obvious traffic appeal, where any amount of industry knowledge or editorial review would have caught the obvious mistake underneath.
On Monday afternoon (European time), Cristiano Ronaldo appeared at a press conference to discuss Portugal’s coming Euros match against Hungary. Just before the event began, he moved two bottles of Coke off the press table, lifted up his water bottle, said “water” in Portuguese [1], then murmured “Coca-Cola” in a derisive way.
Some resulting headlines:
The Guardian: “Cristiano Ronaldo snub wipes billions off Coca-Cola’s market value”
The BBC (via Twitter): “Ronaldo's snub wiped four billion off Coca-Cola's market value.”
Business Insider: “Coca-Cola lost $4 billion in market value after soccer star Cristiano Ronaldo suggested people drink water instead”
Yahoo!: “Cristiano Ronaldo's Euro 2020 stunt costs Coca-Cola $4 billion”
Somehow also Yahoo!: “Coca-Cola shares drop $5 billion after Cristiano Ronaldo's gesture to drink water”
The Athletic: “Ronaldo's Coca Cola gesture followed by $4bn drop in company's market value”
ESPN: “Cristiano Ronaldo snub sees Coca-Cola market value fall by $4bn”
I could go on. You get the idea.
Anyway, in realityville:
This is not how anything here works. Coke has one of the strongest bases in consumerism, and a notoriously addictive core product. An offhand gesture from a single athlete (even an ultra-famous one) who has long been very public about his feelings on the subject isn’t going to move that kind of market. [2]
Coke is also one of the largest sellers of bottled water in the world (owning Dasani, Smartwater, Vitaminwater, and other popular brands — with The Athletic reporting that the water bottle Ronaldo held up was a Coke product).
Coke’s stock ended up higher by day’s end compared to what it was when Ronaldo did his thing (roughly 9:43am ET), where all the meaningful losses came prior. [3]
Though only one article reflected it (in Portuguese), the most likely reason that Coke’s stock had dropped earlier, by roughly 1.5%, was that it was their ex-dividend day (i.e., all $KO shares purchased beginning that morning no longer qualified to receive the July 1st dividend of $0.42 per share). [4]
Here’s a helpful chart from that (excellent) Portuguese article, where the blue line marks the time of what Bloomberg is (sigh) calling “Bottlegate”:
So Ronaldo did/said a thing and the market stayed more or less flat for several hours thereafter because of course none of this mattered. No story here.
But the average reader would be excused for thinking otherwise, because loads of major media orgs weren’t interested in what really happened. They were happy to just put in mild caveats near the bottom of their carbon-copy pieces in the form of “maybe other things impacted the price too, I dunno lol” while running declarative headlines they knew would get engagement. (And some didn’t even include a caveat!)
Though I’m pleased to say I found a NYT reporter who was at least willing to be publicly skeptical (even if this never resulted in the NYT writing anything to balance the dominant narrative):
One of the replies to which was:
That second tweet was the only example I could find on Twitter of anyone in the media making the (very obvious!) dividend connection. [5]
Otherwise I could only find three outlets that revisited the story in any capacity, who at least got as far as “ok one thing happened before the other”, even if they didn’t get so far as “here’s what likely did move the price”, and even if they got there slowly:
The Athletic, who revisited yesterday (i.e., three days after the event), but who never corrected their original article (linked above), and only got to the point in the 20th paragraph of their follow-up
The Financial Times, who didn’t get to it until early this morning (British time) [6], but who at least presented it in their sixth paragraph
Sportico, who led the pack by getting there Wednesday afternoon, and were the only ones to verify and clarify what time the press event started
So basically the only outlets we can really praise here are Sportico, which I’d never heard of until this morning, Maisfutebol, which only publishes in Portuguese.
It’s not a great look for the great media empire of the west, or for those journalists who continually insist that clicks just aren’t a real motive anymore. The model is broken, and even prominent outlets have minimal controls in place. While that’s not the fault of all the journalists involved, we can’t fix the problem until we acknowledge it.
Anyway, happy Juneteenth weekend.
[1] Some might find this a petty distinction, but several outlets (eg., this Reuters headline) reported that Ronaldo said “drink water” (or “beber água” in Portuguese), while he very clearly only said “água” without a verb. Does this matter in itself? No. But it’s symptomatic of the whole clickshare mentality. It’s not just that they’re all copying each other with the same lazy take and headline. It’s that they’re not even watching the ~20 second clip for themselves.
[2] If you were to tell a Coca-Cola marketing exec that you were putting up a giant billboard of a bottle of Coke with the words “drink water instead” and were going to deliver tens of millions of impressions to it, their most likely response would be “and we don’t have to pay you???” Because (1) they sell a lot of water, and (2) impulse goods sell on impulse, where the image is a very reliable trigger.
[3] Something else to keep in mind is that we wouldn’t expect a bunch of traders to be watching a soccer press conference 15 minutes after the US markets opened. That’s a busy time of day! It would take minutes to hours for that news to propagate, as it did in the non-financial world. The earliest re-broadcast I could find online was uploaded to YouTube at 10:59am ET, and the first notable tweet at 1:05pm ET.
[4] Yes, yes, “all known information is priced into the market”, and, sure, there are always other developments affecting prices. But those who bought said stock the prior market day got a $0.42 per-share bonus compared to those who bought it on the 14th, making it a waaaay more reasonable baseline hypothesis for a drop in value of roughly the same amount (which was a bit frontloaded that AM likely because some of the normal Monday morning buying pressure would have been shifted to Friday). This isn’t to say that stocks will/do dip every ex-dividend day, but only that when a stock does dip on said day, it’s a good place to start the inquiry.
[5] While I couldn’t find any other examples from journalists (queries here and here), I did find a lot of examples from random Twitter accounts pointing out the dividend connection, many of whom were replying to mistaken outlets. None got traction.
[6] I suppose someone could argue “they had no responsibility to get there faster, as they weren’t one of the ones who made the mistake, and rushing to criticize their industry colleagues isn’t something they’re going to want to do”. While I don’t personally find this argument terribly compelling, I grant that others might.
I think I like these short breakdowns just as much as the long form stuff.
And if the brevity means we can get more of them = a larger fraction of the mainstream news stories get analyzed, then that's awesome.