California Proposition 37 passage built into stock price or not?
It sounds like there may be more to the issue than the fear based alternative news likes to peddle. And while I am reconsidering my personal stance and how I will vote I am trying to guess whether you'd see a share price drop November 7th if it passes or possibly even a share price pop in the event that it fails to pass.
The GM seed business division seems to represent around 50% of the revenue if I am remembering the earnings announcement correctly. So obviously passage of the proposition could decimate earnings in the longer term. I am curious if the stock market would react strongly to passage or non passage.
I am contemplating buying out of the money put options and out of the money call options that expire November 16 to take care of either eventuality. I have a feeling there is more downside risk of it passing than upside potential if it doesn't pass.
Does anyone think that analyst may downgrade the stock if the proposition passes?
There certainly will be a shift in sentiment; that the company is vulnerable. California is a bellwether state as well as the biggest state economy in the Union. It's a pretty safe bet that there will be more food companies specifying non-gmo's to avoid labeling and doing that for their nationwide products. Also, other states (either their voters or legislators) will likely follow suit and require gmo labeling. I have to agree with Scott** that the lawyers will be all over this for awhile, but I don't necessarily think that food companies will wait before acting.
As for how concerned management is: spending $40M on anti-prop 37 ads maybe chump change to these billion dollar companies, but it's still $40M. Probably says the most about the level of concern. As for the pro-labeling groups, their limited dollars are being conserved for the last 10 days before election time - so starting very soon it will no longer be a one sided argument and that is going to have an impact on the final vote. Given the amount of gmo foods that are fed to animals or used for biofuels, the gmo label isn't necessarily a kiss of death for corporate profits, but it is sure to have an impact and I believe that uncertainty will impact the stock price.
All of this nonsense is the equivalent of saying to close down every grocery store except Whole Foods. Can you imagine that? You already do have certain labels in WFM showing which foods are this or that, and if you look at their promoted beefs that are touted as 'healthier' the price will blow you away! So, I bet if you see Kroger forced to label certain products or their food distributors having to go to the trouble of doing so, you can bet that it will be passed on to the consumer, and some things will definitely not sell as well as the GMO foods that are in nearly everything.....imo. It's also similar to those organic pizza parlors that were in fad, and in some areas have done well. But from my last look, many of those Pizza Fusion shops closed down, such as in AZ, & GA. I guess many folks just want that stuff that is cheap, tastes good and kills ya?.....lol.
You people crack me up with your 'doom & gloom' baloney!