What Happened?
Shares of chocolate company Hershey (NYSE: HSY) fell 3.9% in the morning session after the company reported third-quarter results that, despite beating revenue expectations, showed a steep drop in profitability. Although sales grew by 6.5% year-on-year to $3.18 billion, the company's adjusted earnings per share fell by 44.4% to $1.30. Hershey's profits were squeezed by declining margins, with its gross margin falling 8.7 percentage points from the prior year due to higher input costs. The company's operating margin also compressed significantly. This sharp decline in profitability appeared to overshadow the strong sales figures, raising investor concerns about Hershey's ability to manage rising costs.
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What Is The Market Telling Us
Hershey’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 11 months ago when the stock gained 16.4% on the news that Bloomberg reported that Mondelez, the company behind Oreo cookies, is exploring a potential buyout of Hershey. Sources say the discussions are still in the early stages, and Mondelez may not make an offer. Hershey has a history of turning down acquisition attempts. In 2016, it rejected a $23 billion takeover bid from Mondelez. Had Hershey accepted, the deal would have formed the world's largest candy company. Most acquisitions close at a premium, raising the possibility that existing investors could exit their positions at a higher price if Hershey strikes a deal with a buyer.
Hershey is flat since the beginning of the year, and at $169.55 per share, it is trading 13.3% below its 52-week high of $195.56 from October 2025. Investors who bought $1,000 worth of Hershey’s shares 5 years ago would now be looking at an investment worth $1,233.
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