A sharp drop of 24% during the year! McDonald's (MCD.US) stock price is likely to hit the longest weekly decline record in more than 20 years, and the new strategy of US$8.5 billion raises market concerns

The Zhitong Finance App learned that the stock price of the global fast food giant McDonald's (MCD.US) continues to be under pressure and may record an eighth consecutive week of decline this week, setting the record for the longest continuous weekly decline since the Internet bubble burst. Weak growth in same-store sales in the US, management's cautious attitude towards business prospects, and capital expenditure pressure brought about by the newly announced long-term strategy are weakening investors' confidence in the company.

As of early Thursday trading, McDonald's stock price hovered around $232 per share, with a cumulative decline of about 24% since this year. Even after extending the observation period to the past five years, the stock's cumulative decline reached about 5%, reflecting the continued weakness of the company's stock price performance in recent years.

According to the current trend, if McDonald's stock price fails to clearly rebound before Friday's close, the stock will officially record its eighth consecutive week of decline, setting the record for the longest continuous weekly decline in more than 20 years. Over the past five trading days, McDonald's stock price has dropped by about 1.5% cumulatively.

Weak same-store sales performance in the US, management's cautious outlook heightens market concerns

McDonald's stock price has continued to weaken recently, which is closely related to the operating performance of its core US market. As one of the world's largest fast food chains, the same-store sales performance of McDonald's US business has always been an important indicator for investors to measure its growth prospects. However, the recent weak growth in same-store sales in the US has raised doubts about whether the company can resume growth momentum.

Meanwhile, McDonald's CEO Chris Kempczinski is cautious about the business outlook, which has further affected investor sentiment.

While growth momentum has not improved significantly, market concerns about McDonald's future profit performance are heating up. Investors not only want to see a recovery on the sales side, but also pay more attention to whether the company can guarantee profit margins while maintaining the competitiveness of the franchise system.

The $8.5 billion “NEXT” strategy sparks controversy and the profit margin target is delayed until 2030

In addition to short-term operating pressure, McDonald's recently announced “NEXT” strategy has also become the focus of market attention. According to the plan, McDonald's will provide a total of 8.5 billion US dollars in support to franchisees for the period ending 2036. This long-term support plan aims to provide resources for the franchise system, but its funding arrangements have raised concerns among some investors.

The central focus of the market is that the plan requires McDonald's to bear large-scale cash expenses in the near future, and the time the company expects to achieve profit margin targets has been delayed until 2030. This means that McDonald's will need to invest more capital to support the franchise system in the next few years, but there is still uncertainty about whether the relevant investment can be translated into sales growth and profit improvement in a timely manner.

For investors, the contradiction between increased short-term cash expenses and delays in improving profit margins has become an important factor in evaluating this strategy.

Although the time span covered by the “NEXT” strategy extends to 2036, the capital market is more concerned about its impact on financial performance in the next few quarters and the medium term. In a context where same-store sales in the US have yet to resume strong growth, new capital commitments have further heightened market concerns about the company's cash flow and profitability.

Stock prices continue to be under pressure, and the market waits for signs of improvement in operations

McDonald's stock price has fallen by a cumulative total of about 24% since this year, reflecting investors' concerns about the company's short-term growth and long-term strategy execution. If this week finally closes down, the stock will record a weekly decline for eight consecutive weeks, forming a trend of continuous weakening for the past two months. It is also a record of continuous decline not seen since the bursting of the internet bubble.

For McDonald's, whether it can improve the US same-store sales performance in the future and how to balance the capital investment and profit margin goals of the “NEXT” strategy will be important factors for the market to evaluate the company's prospects. In a situation where weak business growth coexists with pressure to invest in strategies, investors are still waiting for more clear signals of sales recovery and profit improvement.