Growing up, going to McDonald's was magical for me. They had the play area for my brother and I to chase each other through, the food tasted great, and I always got a toy when I left. However, as I grew up, I started to realize why Mom and Dad wouldn't take me to the home of the golden arches very often. The bottom line is that it's unhealthy! And while my parents were health conscious in the past, not everyone was. However, times seem to be changing and more people are starting to think about what they're consuming before they take that first bite. Unfortunately for McDonald's this is causing major problems for their bottom line. After a long term run of declining sales and poor reports, McDonald's announced today that it will no longer be providing monthly sales reports. So today, we'll talk about why the company would make this change, how the market reacted, and what we can expect from the fast food giant moving forward. So, let's get right to it…
Why Would McDonald's Want To Stop Reporting Sales
Presumably, McDonald's would hope that investors think they are working so hard in other areas, reporting sales monthly is too cumbersome. However, this story goes far deeper than that. As mentioned above, the company has been struggling with sales as health conscious consumers start to veer away from fast food. Those visiting fast food restaurants are starting to go to higher end options like Five Guys and Shake Shack. In the mean time, McDonald's struggles to keep sales even at recent numbers; let alone prove growth. As a matter of fact, every monthly sales release recently has been disappointing; leading to a decline in the company's stock price. So, as with most other experts, I see this as a way for McDonald's to do what it can to slow declines in its stock.
How The Market Reacted To The News
After the announcement that the company would stop reporting monthly sales, the stock declined for most of the day before popping up slightly near the closing bell. By the closing bell, the stock was able to make it just above the green line; closing the day out with a gain of 0.2%.
What We Can Expect To See From McDonald's Moving Forward
Moving forward, I'm not expecting much positive news out of McDonald's stock. The reality is that the company has been struggling with declining sales for quite some time now. While they've added artisan sandwiches and healthier options to their menu, nothing they've done seems to have solved the problem. So, even though there's a new plan to pick up sales, I've lost my faith in the company's ability to reach their goals, even with the new plan in mind. At this point, the stock will likely continue on declines until the company shows proof that something they've done for sales has started to work!
How You Can Earn From McDonald's' Failure
While declining sales may be a big pain for McDonald's and its stock holders, this can prove to be a great thing for binary options traders. Declining sales mean declining earnings. This will lead to more declines in the stock price. So, as a binary options trader, you're going to have plenty of opportunities to cash in on McDonald's put options moving forward.
What Do You Think?
Where do you think McDonald's is headed and why? Let us know in the comments below!