Kellogg's Stock Takes Big Hit After Phelps Bong Controversy


I'm no expert on the stock market, but this doesn’t look good for Kellogg's:

Kellogg Co. Stock -- February 2009:


As the chart shows, the company's stock took an immediate dive following its decision to drop Michael Phelps over the infamous bong hit photo. What began as a coordinated boycott by drug reform organizations quickly escalated into a full-blown media frenzy as major news outlets picked up the story. Pot-friendly websites like Digg.com began directing massive traffic to news coverage that was critical of Kellogg's anti-marijuana posturing, thereby increasing the campaign's visibility among likely supporters.

The cumulative impact of all this negative publicity is helpfully illustrated by The Vanno Reputation Index, which monitors the public image of leading corporations:
Out of the 5,600 company reputations Vanno monitors, Kellogg ranked ninth before it booted Phelps. Now it's ranked 83. Not even an industry-wide peanut scare inflicted as much damage on the food company's reputation. [Business Insider]

In the current economic climate, it would be silly to think we're solely responsible for Kellogg's falling stock. Still, the Vanno data clearly shows that we've dealt a substantial blow to the company's reputation at the worst possible time. Whether or not we actually had a considerable impact on Kellogg's bottom line is beside the point. What matters is that we sent an unprecedented message to corporate America that reefer madness is bad for business.

For far too long now, the drug war has been sustained by a corporate culture that embraces anti-drug propaganda at every turn. Just as our press and politicians have struggled to come to terms with evolving public attitudes about drugs and drug policy, corporate America has remained enslaved by the tired mindset that a healthy public image is best secured through hardline anti-drug posturing.

The Phelps saga may soon be regarded as the moment when all of that changed, the unforeseeable, yet inevitable moment when the invisible hand of America's marijuana culture finally became a fist.

Update: Many have pointed out, and I agree, that Kellogg's falling stock is much better explained by the economy than the boycott. I thought I did a sufficient job of drawing this distinction in the post, but I can understand how the title and tone of the overall post might lead some to conclude otherwise. So for the record: the point of the post is not that the marijuana reform community crashed Kellogg's stock. I don't believe that to be true. The point is that our message gains much better traction at a moment like this. The last thing Kellogg's wants is a highly publicized boycott in the middle of an economic crisis.

I've been skeptical of previous boycott proposals that have circulated among reformers in the past, but this effort has been a massive success. In terms of media coverage and the subsequent slaughter of Kellogg's corporate reputation ranking, we couldn't have asked for a more visible impact than we've managed to achieve.

Just because Kellogg's hasn't formally surrendered to us somehow doesn't mean we didn't kick their ass. I'm sure they are utterly stunned by the backlash they received, and that's what matters.

Permission to Reprint: This article is licensed under a modified Creative Commons Attribution license.
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lame article

This guy didn't even tell us his point... Why does this matter? Should Phelps not have been dropped. Let it out man!

dropping phelps

i think people are mad because as a swimmer Phelps should have one of the best set of lungs in the world.The way he toked on the bong mad me livid! He should have at least sucked on that baby for 10-15secs.

Baby Puffs... Might Explain His Childish Apology

Baby Puffs... Might Explain His Childish Apology

ha

proctor and gamble missed their earnings by a bunch that day. all personal/food brand commodities are down. has little or nothing to do with phelps

Update wrong

"Update: Many have pointed out, and I agree, that Kellogg's falling stock is much better explained by the economy than the boycott. I thought I did a sufficient job of drawing this distinction in the post, but I can understand how the title and tone of the overall post might lead some to conclude otherwise. So for the record: the point of the post is not that the marijuana reform community crashed Kellogg's stock. I don't believe that to be true. The point is that our message gains much better traction at a moment like this. The last thing Kellogg's wants is a highly publicized boycott in the middle of an economic crisis."

this is wrong for one good reason. In hard economic times when the stock market is in decline consumer staples, food and basic pharmaceuticals are the types of stocks that go up because people still need them regardless of the economy and stock market. They are the safe stocks for this financial climate.

This is why, on Feb. 5, the Wall Street Journal reported Kellogg earnings increased 1.7%.

In bad markets institutional investors simply move to a different group of stocks that can hold up against the reasons for the market decline. Things people need regardless of banking system turmoil and home value declines. Food.

The proof in the pudding will come with Kellogg's next earnings report at the end of April or early May.

How about we just discuss

How about we just discuss this over a blunt?

:)

Go Michael Phelps for smoking weed, makes me love him even more ;*

His childish apology hurt, not helped, the marijuana movement...

Claiming to make a juvenile mistake does not advance our cause. Phelps failed to stand-up, like a real man would, and speak truth to power. Instead he rolled over for profit... like a whore!

economy, not stoners

i don't think dropping phelps had anything to do with the decline in stock prices. I'm sure I could find other company's who stocks dropped just as fast as Kellogg's that had nothing to do with Phelps.

Phelps being dropped had nothing to do with drugs. He was dropped because he was stupid enough to have a photo taken of him doing something considered very illegal in the US. If the photo was of him doing something equally as illegal as smoking a bong (I'll let you figure out what crime that may be), he would have still been dropped.

the people making the Phelps controversy out to be a anti-drug campaign are stupid.

Show your support for AB 390

The economic argument for cannabis law reform is now key, so if you want to show your support for the California bill (AB 390), send some cash to Arnie:

Governor Arnold Schwarzenegger
Office of the Governor
State Capitol
Sacramento, CA 95814

Pass it on and post this everywhere!

Think about it

The boycott wont hit soo fast i mean how often do you buy a box of cereal.
over a period of time it will effect it more if you keep the boycott up

I'm not buying it.

I seriously doubt their anti-pot stance has anything to do with their stock prices.

OTOH, I agree that terminating Phelps contract was stupid in this day and age.

After all, the POTUS "inhaled frequently" in his younger days and it wasn't an issue during the election campaign.

Scott
http://angrykeyboarder.wordpress.org

HI GRINGOS

a salute from mexico!!!! (the major pot supplier for americans)

obviously there is some guys posting here with almost no knowledge about stocks and market-shares.
first let me state. our tiny boycott is not responsible for dropping down the kellog's stock.
it would be too fast, if we were seeing a change in the stock behavior since the lost sells (or revenues) for this boycott can't be reflected yet in the stock value until a month or more. then, may be (i don't think so) but may be, we will see an affectation.
in fact kellog's is doing very well compared with another stocks. there is a bunch of stocks which have lost more than 80% their value.
and as many already clarified for us the dow jones looks almost identical than the kellog's stock graphic.

i don't think to mark your bills would be a good idea. (by the way george washington was one of the greatest heroes in history, even a mexican like me can realize that. drawing a dick on his mouth is just WRONG).

i can give you a better idea. we are taking in practice here on the little town i live.
we are a group of mexican friends (some regular smokers, some others just eventual smokers). and we are separating the pot seeds before smoking them. we keep them and later while we are walking or driving to our works or houses, we just throw the seeds on places which looks like good places to grow. highways, avenues and vacant lands. and telling all our friends to do the same thing.
now the pot is growing by itself EVERYWHERE on this little town and is really funny how the cops are really busy trying to fight mother nature. chopping the weed. each plant they took off, there is 2 growing (i call it, operation HYDRA). the good way to do it is throw your seeds as far as you can of each other so cops have to travel more distance to work on it. eventually they exhaust their resources and let a few plants just growing there.

i think if every smoker throw their seeds in this way these would be unstoppable (specially if we throw it on rainy days)

sorry for my bad english
see ya later guys!!!

In my part of the country

Smokers get either locally grown or BC grown, sensemilla indica (skunk) bud (no seeds, little in the way of stems, just 98% smokeable bud). No one I know gets any imported Mexican cannabis. In order to do what you suggest we would have to find a source from which to purchase seeds to scatter, tho definitely sativa seeds would be the best choice to scatter. I do not recommend you beginning a seed selling business, either, look at what happened to that Canadian guy they call the Prince of Pot, the US law enforcement went into Canada and arrested him, I'm sure they'd do the same thing to a Mexican dealer of seed.

I'm pro-choice on EVERYTHING!

i am no gringo

Although yes... DIRECT IMPACT will be determined by sales next quarter.

The truth is.. stocks are speculation, all stocks are not determined by balance sheets and finanncial statements.

Stocks are random stochastic process based on short terms trends. Which include Media. SAME STUPID REASON WHY APPLE STOCK IS BASED ON STEVE JOB's HEALTH.

Although Kellogg's stock has lowered at the same rate as the Market, the market isn't made up of necessity goods that are not supposed to decrease with market, Unless the stock itself was overpriced to begin with.

Although it drops similar to General mills, like i said before, they have have more shares outstanding.

Think about it, these are needs based items, and GM and Kelloggs ARE NOT COMPLEMENTS they do cross elasticity of demand. THEY ARE SUBSTITUTES and something else should be going up if they are going down since it is a needs based good. Which tells me that their stock is overpriced maybe because they are invested in something that is susceptible to recession. (property value doesnt count either)

article is a joke

Why would you hope for the downfall of a reputable company for upholding the law? i think weed should be legalized but boycotting kellogg's is not helping the cause at all. That being said this article is completly bogus, Kellog's stock has been up and down as has every company in the world, to even say that their current downtrend is a result of your "boycott" is asinine. You have to look at the big picture, and other companies to make an assumption like this. every food commodity took a hit on these dates, and kellogg's trend down begin long before your 'boycott'.

?/?

how is boycotting a reputable company forcing the government to legalize pot???

It shows that people want

It shows that people want cannabis to be legal or decriminalized because they are tired of all the negativities the drug war causes with no positive results. It doesn't force the government to do anything, although it should, the government doesn't always tend to listen to the people like it is supposed to.

this article has moved me I

this article has moved me
I hereby initiate the boycott of all kellogs products

thank you for listening to me several months in advance im happy with the results so far.

To ha's comment, explain

To ha's comment, explain then why General Mills, Nabisco, and about every other stoner food company went up that day and the many days before.

WE DID MAKE THE STOCK CRASH!

Looking at the kellogg's stock over the last 6 months you can see that they clearly held there own when the melt down started at the end of last year. They didn't tank like almost everyone else did. When they made their decision to drop Phelps they were at the peak in the chart above and I saw emails and post going out on boycotting Kellog's that day (including mine at: www.bruceperlowin.com) so the backlash was actually beginning a day or two before it hit mainstream. Now they are at an all time 5-year low in their stock price and as the boycott filters throughout the consuming public their stock will continue to drop - bringing a very strong and overdue message to corporate America. Now everyone needs to actually look into this junk food peddlers products and find out who the real drug pushers of harmful substances are - Kellogg's is among the worst offenders in this area.

Kellogg's stcock price

It is important to compare the performance of Kellogg's stock to a relevant benchmark. If the entire market is going down it will take K with it.
You can got to bigcharts.com and compare a two month chart of K to the S&P500. You will notice that the fall in K in February is the same as the overall market. But what is interesting is that K has not participated in the rally in March.
Comparing K to General Mills you see no such divergence. GIS has not rallied in March with the overally market either. There is no evidence that a boycott has effected Ks stock price at this time.
K's first quarter results from Jan-Mar, will be released in April. The first full quarter since boycott, with potential drop in sales will be in the 2nd quarter April-June, reporting the numbers in July. It will be very interesting to compare sales to last years 2nd quarter and compare the change in sales to GIS. Also note that K sells a premium product and I imagine a lot of people will trading down to generic or other more economical foods during a recession.

I'm High

... and all your captions are really funny. Internet banter cracks me up

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