'They Just Stopped Buying': Bud Light Is Now Selling For Less Than Water In Some US Warehouses, But Is BUD Stock Too Cheap To Pass Up? 1 Reason To Pick It Up Now

Bud Light has been fighting an uphill battle since it partnered with transgender social media influencer Dylan Mulvaney in April.

While Mulvaney has 10.7 million followers on TikTok, the collaboration triggered a backlash on social media and led to a boycott by some beer drinkers.

The New York Times recently reported that at Glenn Miller's Beer & Soda Warehouse in Lemoyne, Pennsylvania, a 30-pack of Miller Lite was selling for $24.99. In contrast, a 30-pack Bud Light was priced at just $8.99 after a rebate.

"At this point, it's cheaper than some of the cases of water we're selling in the back," said Andy Wagner, manager of the warehouse. "It's just not moving like it used to."

Wagner pointed out that Bud Light sales at his store since mid-April plunged 45% from a year ago. The decline can be attributed to the evolving preferences of consumers.

"It's not that they stopped drinking beer," he said. "They just stopped buying Bud Light."

Shares of Anheuser-Busch InBev BUD, the multinational brewing company behind Bud Light, have also taken a hit. Since April 1, when Mulvaney first promoted the beer on social media, the New York Stock Exchange-listed BUD stock has tumbled about 12%.

While that drop in share price has resulted in the loss of billions of dollars of market cap, the situation might present an opportunity for contrarian investors.

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‘Headwinds Are Likely To Fade'

It's no secret that Bud Light has lost market share.

According to consulting company Bump Williams, using data from NielsenIQ, Bud Light is no longer America's best-selling beer. The top spot now belongs to Modelo Especial, brewed by Constellation Brands STZ.

Bud Light's declining market share poses a concerning outlook for AB InBev (ABI), but Deutsche Bank analyst Mitch Collett sees potential in the company.

"We believe recent underperformance implies a permanent reduction in ABI's U.S. business. Our proprietary survey data suggests these headwinds are likely to fade even if we do not expect the U.S. business ever to fully recover from its current challenges," the analyst wrote in a recent research note.

Collett upgraded his rating on AB InBev from Hold to Buy and raised the price target on the company's European-listed shares from €59 ($65.12) to €60 ($66.22).

Considering that the stock currently trades at €53.52 ($59.07), the analyst's new price target implies a potential upside of 12.1%.

Collett's point is that although Bud Light's situation is unfavorable, there is potential for improvement in the future.

"Taken together, our survey data shows that Bud Light as a brand faces significant challenges — particularly with older consumers," he wrote. "However, we believe the forward-looking data sets imply that the challenges will at least partially fade."

AB InBev stock has been a volatile name and even top analysts aren't right 100% of the time. If you don't like that kind of volatility, you might want to look into reliable income plays outside the stock market — such as investing in rental properties with as little as $100 while staying completely hands-off.

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This story was originally published on July 6, 2023, and has been updated to reflect recent data.