California Proposition 37 passage built into stock price or not?
I am curious what board member's think would be the effect of a passage of Proposition 37 in California which would require the labeling of many GM foods. Monsanto has spent Millions on the anti-37 campaign and its starting to have a real effect on the polling.
Proposition 37 has gone from 70% in favor to around 48% in favor and the state is being saturated by anti-37 advertisements everywhere.
I have seen statements by GM seed companies saying that labeling is a death knell to the product. I believe labeling of the Rgbh hormone in milk totally killed the market for that cow hormone.
does anyone think since its now less certain that Proposition 37 will pass that if it does pass that we could see a decent immediate drop in the MON share price? Or alternatively do you think that its already factored into the price?
No one seems to be doing any objective analysis its all purely political as to whether one is for or against this ballot proposition. In the interest of full disclosure I am personally for it but trying to get an idea. So far intrade has not made a market in the proposition's passage either. No one really seems to care about a potentially huge factor effecting the marketability of the seeds product line and the roundup and other herbicide and pesticides.
twineberg2, I don't think most investors have paid enough attention to Prop 37. I think it will pass and I think it will be bad for Monsanto. When it does pass, it will do great harm to the environment and to the price of food. At a minimum, some food companies will reformulate their products and since almost all corn and soybeans are now GMO, they'll have to bid against each other for a rather rare commodity.
You say you are for it. Here's something to think about. A major GMO crop is herbicide resistant corn. But corn before there was any such thing as a GMO, corn was already naturally resistant to the herbicide atrazine. Roundup-ready corn came from Monsanto but Atrazine-ready corn came from God (or evolution - I don't want to get into that.) So corn farmers used a lot of atrazine for weed control in corn fields. Atrazine was the world's most widely used herbicide. But now, with GMO corn that is resistant to glyphosate, atrazine is much less used and glyphosate is the world's most used herbicide. Grow less GMO corn and the farmers will go back to using atrazine. But atrazine is 350 times as toxic as glyphosate. Is this what you really want?
Move on to soybeans. Monsanto's GMO soybeans tolerate glyphosate. But there's another variety of soybeans sold by another giant seed company, which is resistant to another herbicide, Liberty. That variety was bred without using GMO technology. So it's a safe bet that if GMO soybeans are less used, the farmers will switch to growing soybeans that tolerate Liberty. You will have switched from one herbicide to another. Is that what you really want? The third big category of GMO crops are the Bt crops. Reduce their use, and the insects they resist will have to be controlled as they used to be controlled, by spraying pesticides. Again, is that what you really want?
Perhaps you think the phased out GMO crops will be replaced by organic crops. Yes, some of them will. And maybe you think that's a good thing. Even so, you would be taking a huge risk.
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?