McDonald's Stock in Limbo Amid Alleged Ice Cream Machine Probe

The stock has barely moved this week

Deputy Editor
Sep 3, 2021 at 10:05 AM
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There's been a long-standing mystery as to why the ice cream machine at every McDonald's Corp (NYSE:MCD) seems to be broken every time its staff is tasked with making a McFlurry, and now the Federal Trade Commission (FTC) is trying to find out why. There are reports that the FTC sent letters, reviewed by the Wall Street journal, to franchise owners over the summer in an attempt to get to the bottom of the issue. While it looks like no ground has been made on the perpetually broken ice cream machine problem, McDonald's said in a statement that there is no reason to believe it is the focus of the FTC's investigation, while the FTC itself declined to comment. 

Amid all this chatter, McDonald's stock has remained pretty stagnant, trading just 0.6% lower today at $238.43, and moving just 0.4% higher this week. Since hitting a record high of $247.05 on July 27, the shares have succumbed to overhead pressure at the $240 region, though the 80-day moving average has done its part to curb some of these pullbacks. 

An unwinding of bearish sentiment in the options pits could push MCD higher. The stock's Schaeffer's put/call open interest ratio (SOIR) of 1.57 stands higher than all other readings from the past year, suggesting short-term options traders have rarely been more put-biased. 

Analysts, meanwhile, have been overwhelmingly bullish. Of the 26 in coverage, 20 call MCD a "buy" or better, while six say "hold." Plus, the 12-month consensus price target of $266.09 is an 11.5% premium to current levels.


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