It’s Friday the 13th – not to mention the fact that there’s a full moon tonight – and one Dow Jones stock has investors feeling very afraid. McDonald’s has fallen sharply over the last week, shedding 5% of its value since last Friday. Adding insult to injury, the Dow Jones index is on a roll, finishing in the green for the past eight straight sessions and the Federal Reserve hasn’t even gathered for its highly anticipated September meeting yet in which interest rates are widely expected to be cut.
So why is Dow Jones component McDonald’s falling out of favor with investors and is the pain expected to persist? One reason could be that the company recently committed to pouring capital into technology, an automated push that includes replacing the human on the other side of the drive-thru with a robot.
McDonald’s this week scooped up a Mountain View, Calif.-based tech startup called Apprente, which counts the likes of Google as its neighbor. According to McDonald’s, Apprente specializes in “voice-based platforms for complex, multilingual, multi-accent and multi-item conversational ordering.” This push toward automation might not sit well with some of McDonald’s regulars such as tech-averse billionaire Warren Buffett, who has made McDonald’s a staple in his diet.
McDonald’s isn’t going anywhere. The company generates roughly the same amount of sales in a single quarter than fast-food rival Chipotle does in an entire year. McDonald’s reported more than $5 billion in revenue in Q2 vs. Chipotle, whose full-year 2018 revenue fell slightly shy of $5 billion. McDonald’s has also grown its comparable-store sales for the past 16 straight quarters, which reflects growth at the fast-food giant’s existing locations. So people are still frequenting the company’s restaurants, which is a good sign for the long-term prospects of the dividend-paying stock.
Even though the short-term chart on McDonald’s may be ugly, the long-term picture is quite impressive. An InvestorsHub report on CEO pay reveals that McDonald’s market value, which currently hovers at $159.7 billion, has ballooned by more than $70 billion under Steve Easterbrook’s tenure. For MCD investors who are not fans of the drive-thru robot, they might want to get used to it, as this latest tech acquisition appears to be just the tip of the iceberg for Dow Jones stock McDonald’s in the fast-food wars.
Last modified: September 23, 2020 1:01 PM