Has Struggling McDonald's Stock Found a Bottom?

The fast food name hadn't raised royalty fees in roughly 30 years

Digital Content Manager
Sep 22, 2023 at 12:18 PM
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Dow stock McDonald's Corp (NYSE:MCD) is up 0.8% to trade at $273.14 at last check, after the fast food concern announced it will raise royalty fees for new franchises in the U.S. and Canada to 5% from 4% starting Jan. 1, 2024. This constitutes the first hike of its kind in roughly 30 years, which comes amid slower revenue growth and lower menu prices.

MCD has taken a 9% breather from its July 21, all-time high of $299.35, and yesterday dropped to its lowest trading level since late March after multiple rejections at its 40-day moving average. The shares still remain above their year-to-date breakeven level, though, and sport a 10.2% year-over-year lead.

Today's bounce could have some legs, if the broader market cooperates. McDonald's stock sports 14-day relative strength index (RSI) of 27 that sits firmly in "oversold" territory and indicates a short-term rally could be imminent. 

Long calls have been much more popular than usual in the options pits of late. This is per McDonald's stock's 50-day call/put volume ratio of 1.88 back at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) that ranks in the 81st percentile of readings from the past year.

 

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