Nestle stock price hits 8-month lows

Written by: Michael Harris
December 4, 2020
  • Nestle said it will invest 3.2 billion Swiss francs to hit its target of net-zero emissions by 2050
  • A large financial commitment will be funded through operational and structural efficiencies
  • Nestle stock price plunged to break below important support near 102.00

Shares of Nestle (SIX: NESN) are trading around 2.5% in the red this week to penetrate the key short-term support near the 100 mark. 

Fundamental analysis: Nestle makes net-zero emissions commitment

Nestle, one of the world’s biggest food producers, said it will invest 3.2 billion Swiss francs to hit its target of net-zero emissions by 2050. The first milestone is to slash its emissions in half by 2030, while the company will work to only use renewable electricity at its 800 global sites by 2025.

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Last year, Nestle committed to zero-net emissions by 2050. One of the ways used to achieve this target will be by reducing business travel by 2022 and increase the number of “carbon neutral” brands offered.

“Climate change is one of the biggest threats we face as a society. It is also one of the greatest risks to the future of our business,” said Mark Schneider, Nestlé CEO. 

“We are running out of time to avoid the worst effects of global warming. That is why we are setting a bolder ambition to reach a net-zero future. Deploying Nestlé’s global resources and industry know-how, we know we can make a difference at significant scale. Our journey to net zero has already started. Now, we are accelerating our efforts,” he added.

A large financial commitment will be funded through operational and structural efficiencies, the company says. It also said it plans to work with farmers and vendors to “employ regenerative agriculture practices”.

Nestle will also increase the size and pace of its reforestation strategy by planting 20 million trees each year until 2030.

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Technical analysis: Shares break key support

Nestle share price is trading around 2.5% lower this week to extend the downtrend that has so far yielded losses of over 10% since October. The worrying element for buyers is the penetration below the key support at 100 – 102, a zone that hosts the 100-WMA and horizontal support. 

Nestle stock weekly chart (TradingView)

This break is likely to accelerate the downtrend with the first target on the downside sitting at 97.80. The broken support line around the 102.00 mark will now act as resistance. 

Summary

Nestle announced its plans that include substantial investments to reduce gas emissions by 2050. In the meantime, shares plunged to break below important support.