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$1,000, 5 Years Later: Coca-Cola Stock Fizzes, But Falls A Little Flat

$1,000, 5 Years Later: Coca-Cola Stock Fizzes, But Falls A Little Flat

Investors who have owned stocks since 2016 generally have experienced some big gains. In fact, the SPDR S&P 500 (NYSE: SPY) total return in the past five years is 132%. But there is no question some big-name stocks performed better than others along the way.

Coca-Cola’s Difficult Run: One company that has been a lackluster investment in the past five years is soda giant Coca-Cola Co (NYSE: KO). Coca-Cola investors who bought back in 2016 and held on through some extremely volatile times turned a solid profit, but they fell well short of the gains of the overall market.

Coca-Cola is the textbook definition of a blue-chip dividend stock. Despite U.S. soda consumption recently hitting a 30-year low, Coca-Cola continues to generate cash flow for investors and consistently raises its 2.7% dividend.

Coca-Cola spent the past five years fighting the downward trend in U.S. soda consumption by diversifying its product offerings, investing heavily in non-sugary diet sodas, tea, juice, bottled water, energy drinks, coffee and other healthier drinks. In 2018, the company announced a $3.9 billion buyout of Costa Coffee. In 2020, the company said it planned to launch hard seltzer and cola-coffee products in the near future. Coca-Cola has offset declining organic soda sales growth via new product launches, acquisitions, asset divestments, and the refranchising of its bottling operations.

At the beginning of 2016, Coca-Cola shares were trading at around $42. The stock trades mostly sideways for the next 2.5 years in a range of between $40 and $50.

The stock finally broke out to the upside in mid-2019, eventually topping out at $60.13 in early 2020 prior to the pandemic sell-off.

Related Link: $1,000, 5 Years Later: Disney Stock Finds Its Magic Kingdom

Unfortunately, the COVID-19 pandemic slammed Coca-Cola’s business, shutting down major events and restaurants and crushing soda demand. The March 2020 pandemic sell-off sent Coca-Cola shares all the way down to as low as $36.27, its low point of the past five years. Since then, Coca-Cola has struggled to regain traction in a socially distanced world

Coca-Cola In 2021, Beyond: Coca-Cola shares made it back up to as high as $54.93 in early 2021 before pulling back to around $50.

Ultimately, Coca-Cola investors who bought five years ago and held have generated a modest profit. In fact, $1,000 in Coca-Cola stock bought in 2016 would be worth about $1,373 today, assuming reinvested dividends.

Looking ahead, analysts are expecting Coca-Cola to continue to recover in the next 12 months. The average price target among the 22 analysts covering the stock is $56.50, suggesting 12.7% upside from current levels.


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