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Why Coca-Cola Stock Flopped on Friday
Key Points
This was fairlife, a producer of next-generation milk products.
The company's internal investigation into the incident is ongoing, and law enforcement has been contacted.
Coca-Cola (NYSE: KO) was the victim of a cyberattack, and that news spooked the company's many investors as the trading week came to a close. The beverage giant's shares lost 4% of their value on Friday following the company's announcement of the hack.
Unfairly targeted
After market close on Thursday, Coca-Cola divulged that one of its subsidiaries, dairy beverage company fairlife, had been the victim of "unauthorized access by a third party to a portion of its systems," in connection with a ransomware situation.
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Image source: Getty Images.
Coca-Cola said that, upon detection, it activated its incident response and business continuity protocols. It has also temporarily suspended the production of fairlife in the U.S., although not (for the moment) at the brand's Canada production facilities. It added that it continues to investigate and assess the impact of the breach, and has notified law enforcement.
fairlife produces a range of ultra-filtered milk products and other next-generation dairy offerings. According to its figures, its annual revenue tops $3 billion.
Still a fizzy company
Coca-Cola didn't provide any estimates on the potential economic impact of the hack and the subsequent shutdown. Zooming out, however, the company has a massive collection of beverage brands, many of which post significantly higher sales than the rather niche fairlife.
If I were a Coca-Cola investor, I wouldn't spend much time worrying about lasting financial or operational damage to the company's overall business.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.