Hello WSB,
Have a current conviction with $MCD and would like to share my position / DD behind most recent play.
Quick background, I am 24 y/o investment analyst in NYC currently managing 6.5M personal fund, with 107% YTD return. Have been slowly growing fund with no stand out winners this year, however have dumped over 30%, or about 2M, into this $MCD play as of July 1st.
So here it is:
Before we begin, I think it is clear to most investors the value of $MCD and their position as a blue chip stock in the market. McDonalds has been a strong player for decades and is clearly here to stay. With their innovation and strategy involving marketing and new products rising above the competition, they continually have solidified themselves as the pinnacle of fast food in America and the Globe.
Along with their “recent” app, McDonalds has brought new additions to their business model with surprising success, most notably amongst marketing and creative “collaboration” meals.
Amongst the meals, one stands out in my recent memory as a young person. The Travis Scott meal, sometimes nicknamed the “Travvy Patty” , went viral a few years ago when A -list rapper Travis Scott collaborated with McDonalds to bring them a unique meal. Although this can be seen as an obvious marketing gimmick, the collab blew up and thousands of young people flocked to MCD to either try out the new meal, and likewise fuck with the employees by blasting travis into the order mic etc.
The financial outcome was much greater than expected. When earnings came out shortly that month, $MCD reacted with a +8% on the news, pretty substantial for a blue chip with almost stagnant movement.
Now here is our modern re-do, the Grimace Birthday Meal / Shake.
As of past few weeks, the Grimace Shake / Birthday Meal was introduced by McDonalds as an homage to their 90s character trope, Grimace. It features a meal and respectively colored purple shake.
As a response to this new collab, an outrageous viral trend organically occurred, mostly on TikTok, far from the eyes of the mainstream investing world. Many of our younger visitors may know what I am talking about, but as of my research and personal network asking the past few weeks, it has gone largely unnoticed by anyone above the age of 17-18. The Challenge essentially shows kids drinking the Grimace shake, pretending they are about to make a review of its taste etc. They are then shown tragically dying in the next frame, usually covered in, or slowing vomiting, the purple shake.
However stupid you may find this challenge, one aspect is objective. It has caused an explosion of purchases for the Shake and meal, as well as an explosion for McDonalds and their continued brand awareness / strength in the US market. Some videos even feature as many as 20 Grimace Shakes being spilled out or thrown about in the chaos / aftermath of the “review”. Even better, the online personalities that control the McDonalds social media accounts have all been supporting the viral trend and even impersonating Grimace, furthering engagement with the Brand and their continued awareness behind their recent success. This is critical in my opinion as although the trend may be seen as repulsive and even wasteful in many ways, McDonalds Brand has stood behind its consumers and the funny videos, supporting the movement.
As of today, July 11, 2023, the Grimace Shake and Birthday Meal has been discontinued, with the collaboration being a clear and decisive success for the McDonalds brand. Despite being up 2.3% in the past month, I believe that this viral sensation and extreme financial success for $MCD has not been remotely priced in, and that similar to the Travis Scott meal earnings call, we will see a fantastic jump in revenue this upcoming earnings call. For that reason, I have allocated 30%, or a bit above 2M, into $MCD shares to sell shortly after the upcoming earnings call. Although im aware they will split the success of the Grimace meal into the next few quarters, the “news” will still break on earnings and represent a size-able shift in the market price, my prediction 5-7%. Like I said, the main conviction is that the majority of investment able adults have largely overlooked this incredibly viral phenomenon, and have not included it in their investment analysis of MCD currently.
$MCD Earnings is July 27th, 2023 (16 days from post date).
Thank you for reading my analysis.
Although I am using a throwaway, please feel to DM and connect.
DISCLAIMER: This is not financial advice and solely my personal opinion / observations.
Leave a Reply