BUD stock price could slip by ~20% as Ab InBev sales plunge

AB InBev (NYSE: BUD) stock price freefall continued as reports of dwindling Bud Light sales continue. BUD shares plunged to a low of $54.76 on Tuesday, the lowest point since November last year. The shares have erased almost 20% of their value from the highest point this year. As the stock crashed, its rivals like Boston Beer Company and Constellation Brands shares drifted upwards.

Anheuser-Busch InBev boycotts

The main reason why BUD stock price is plunging is that the company is going through a major boycott because of its association with Dylan Mulvaney. The challenge for the company is that the outrage is coming from both sides.

Conservatives hate the company for being woke after it partnered with Mulvaney, a transgender teen. On the other hand, many liberals believe that the company erred by apologizing and for suspending officials responsible for the partnership.

As a result, the volume of Bud Light and other beers in the portfolio has dropped sharply in the past few months. A report published on Tuesday showed that the company’s sales have dropped by 30% compared to the same period in 2022.

These trends are worrying because AB Inbev’s business was going through turmoil before Mulvaney’s crisis started. As  I wrote in this article, the company’s sales growth has been relatively slow in the past few years.

The other challenge is that the company will need to boost its marketing spend to offset the ongoing boycotts. In 2022, the company spent over $6.8 billion in sales and marketing, a drop from the previous year’s $7.1 billion. It will likely spend more money in marketing this year.

Still, in the long term, I believe that the company’s boycott will fade as the noise surrounding Mulvaney fades. We have seen this happen in other brands in the past, including boycotts on Facebook, Apple, and Dick’s Sporting Goods.

AB InBev stock price forecast

AB InBev chart by TradingView

Turning to the daily chart, we see that BUD stock price has been in a strong bearish trend in the past few weeks. This week, the shares managed to move below the important support level at $57.33, the lowest level on March 16. The 50-day and 100-day exponential moving averages are about to make a bearish crossover pattern.

Further, the Relative Strength Index (RSI) has moved to the oversold level. Therefore, I suspect that the shares have more downside to go, with the next key level to watch being at $44.17, the lowest point in October last year.