McDonald's Falls Into Bear Market, Heads For Fifth Straight Monthly Loss Amid Turnaround Concerns

• McDonald’s shares entered bear market territory after falling more than 20% from March highs. 
• Investors will be watching how McDonald’s NEXT” strategy boosts efficiency.
• On Stocktwits, sentiment around the stock was ‘Bearish’. 

McDonald's Corp.(MCD) has entered bear market territory after its shares fell more than 20% from their March record high, highlighting growing investor concerns about slowing consumer spending and mounting pressure on the fast-food giant's profitability.

MCD Stock Slides As Consumer Spending Weakens

According to data highlighted by Barchart, on Tuesday, McDonald’s entered a bear market after its shares fell 1.35% to close at $268.94, extending a months-long decline. The stock has dropped more than 20% from its March record high of $337. 

For years, investors saw McDonald’s as a safe and reliable company that consistently generated cash. However, weaker spending by lower-income customers, rising operating costs and complaints over higher fast-food prices have hurt the stock’s value and investor confidence. 

McDonald's stock inched up 0.02% overnight ahead of Wednesday. The stock is heading toward its fifth straight month of loss. 

McDonald's Turnaround Strategy

To improve efficiency and attract more customers, McDonald’s CEO Chris Kempczinski has introduced the “McDonald’s NEXT” strategy. The plan includes menu changes, technology upgrades, restaurant improvements and marketing efforts aimed at strengthening the brand’s connection with consumers.

McDonald's currently trades at a price-to-earnings (P/E) multiple of 20.4.

Last month, KeyBanc cut its price target for McDonald’s to $315 from $330 but kept an ‘Overweight’ rating on the stock. The firm said it revised its forecasts after lowering expectations for U.S. same-store sales growth. 

The firm said McDonald’s showed some strengths in the second quarter but has not yet seen a significant recovery in its core business following a difficult April. The company continues to face pressure as investors look for evidence that recent efforts can improve customer traffic and sales momentum.

KeyBanc noted that uncertainty around the company’s strategy, combined with expectations of more difficult comparisons ahead, could limit near-term share gains.

McDonald's is expected to report its fiscal second-quarter earnings on August 4 with analysts seeing a $7.1 billion in revenue and earnings of $3.34 per share, according to Fiscal AI data. 

What MCD Retail Traders Are Saying 

On Stocktwits, retail sentiment around the stock changed to ‘bearish’ from ‘extremely bearish’ territory the previous day, with a 35% increase in message volume over the past week. 

A user said, “oh and don’t get it twisted this isn’t even a symptom of a bear market. Your market is at ATHs, we are GREEN on all indices. This is just a failing company, a failing sector being repriced. Don’t expect a bounce anytime soon. 260s or lower will be your new norm, might as well sell all your stock of this garbage now.”

Another user said, “lol where are the analysts who’s PT > $300 ??? dead?? Markets at ATH and this is near 52 wk lows.” 

MCD stock has declined 12% year-to-date. 

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