Pepsi's Rockstar To Offer Hemp-infused Beverage

PepsiCo stock is cooling from its Jan. 21 record highs

Digital Content Manager
Feb 1, 2022 at 12:05 PM
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PepsiCo, Inc. (NASDAQ:PEP) is joining the beverage sector's push to expand its product options, with Coca-Cola (KO) just last week unveiling a new hard lemonade hitting shelves this summer. Pepsi-owned Rockstar Energy Drink's new beverage won't rely on booze to spice things up, but weed (or at least a form of it). The brand announced its Rockstar Unplugged beverage, which will be infused with hemp seed oil and B vitamins. Unlike THC or CBD, hemp has fewer legal restrictions tied to it, and the beverage will still contain 80 mg of caffeine. Rockstar is hoping to attract a younger, female audience with the release. 

The news isn't doing much for PepsiCo's stock, which was last seen down 1.8% at $170.47. The equity turned volatile last week after falling from its Jan. 21 record high of $177.24 and breaking below the $174 level, which has since become a ceiling on the charts. The formerly supportive 20-day moving average is also keeping a lid on shares, though PEP still sports a 24% year-over-year lead. 

pep feb 1

It's worth noting that the company has another earnings report on the way, due out before the open on Thursday, Feb. 10. The options pits are pricing in a post-earnings move of 3%, which is higher than the 1.2% next day swing the stock averaged during its last eight reports, regardless of direction. Looking back at these past eight sessions, PEP settled higher during all but one, which occurred last February. 

In analyst news today, Deutsche Bank lowered its price target on PEP by $1 to $171. This puts the 12-month consensus price target at $175.71, which is a slim 3% premium to current levels and sits just below its aforementioned record high. Meanwhile, eight of the 10 analysts in coverage consider PEP a "strong buy," compared with just two "hold" ratings. 

Options traders, on the other hand, have turned incredibly bearish. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Pepsi stock sports a 10-day put/call volume ratio of 1.71, which stands higher than all other readings from the past year. This implies puts are being picked up at their quickest pace in that time period. 

Plus, the stock's Schaeffer's put/call open interest ratio (SOIR) of 1.74 sits in the high 97th percentile of its annual range. Similarly, this means short-term options traders have rarely been more put-biased in the past year. 

 

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