The Hershey Company (HSY): Technical and Fundamental Divergence Signals a Bearish Turn

The Hershey Company (HSY) has long been a staple of the confectionery market, but recent technical and fundamental developments are painting a starkly bearish picture. As of May 13, 2025, HSY’s stock price has broken below nearly all key technical indicators, while its fundamentals have deteriorated to the point of triggering a “strong sell” consensus. This convergence of signals suggests the end of a multi-decade bull run—and a high-probability short opportunity or exit trigger for investors.

Technical Breakdown: A Bearish Tape Unfolds

HSY’s stock price closed at $163.30 on May 13, 2025—a 2.55% drop from the previous day’s close of $167.58—and has since continued its downward spiral. The key technical indicators now align to form a sell signal of rare clarity:

1. Moving Averages Collapse:
2. The stock is now trading below all major moving averages:
   • 5-day SMA: $166.72
   • 20-day SMA: $166.17
   • 50-day SMA: $168.26
   • 100-day SMA: $164.43
   • 200-day SMA: $174.75

4. A price below these averages signals a loss of momentum and institutional support, with the 200-day SMA breach marking a critical breakdown from a multi-year uptrend.

5. MACD and ROC Turn Negative:

6. The MACD line (12/26-day) has crossed below its signal line, generating a sell signal with a reading of -0.25, while the Rate of Change (ROC) indicator has dipped into negative territory, reflecting weakening momentum.

8. Zacks Rank: #5 (Strong Sell):

9. The stock carries a Zacks Rank of #5, the lowest possible score, as earnings estimates have been slashed across the board. Analysts now project a 2.8% EPS decline for 2025, a stark reversal from earlier optimism.

Fundamental Weakness: The Confectionery Market’s Slow-Motion Crisis

The technical breakdown is no accident—it’s being driven by a fundamental erosion of Hershey’s growth drivers:

1. Lowered 2025 Guidance:

2. The company has slashed its outlook, citing “persistent softness in consumer demand” and a stagnant core sales growth rate of just 0.5% in the latest quarter. This follows three consecutive quarters of sub-1% growth, a far cry from the 3–5% targets once considered achievable.

3. Confectionery Market Decline:

4. The broader confectionery sector is shrinking. A 2% annual decline in market growth (per industry data) reflects shifting consumer preferences toward healthier snacks, while competition from categories like plant-based proteins and low-sugar alternatives is intensifying.

5. Operational Headwinds:

6. Supply chain disruptions and rising input costs (e.g., cocoa, sugar, packaging) have squeezed margins. Despite price hikes in key markets, volume declines are outpacing revenue gains.
7. Strategic bets on premium products (e.g., dark chocolate, organic lines) have failed to offset the broader malaise.

Convergence of Signals: A Bearish Perfect Storm

The alignment of technical and fundamental factors is rare and ominous:
- Technical Sell Signals: The breakdown below all moving averages and the Zacks #5 rating suggest institutional investors are exiting en masse.
- Fundamental Sell Signals: Stagnant sales, a shrinking market, and margin pressures imply the earnings outlook will continue to deteriorate.

This is a textbook case of divergence turning into convergence: what started as a technical weakness is now being reinforced by fundamentals. The result? A high-probability short opportunity for traders and an exit trigger for long-term holders.

Conclusion: Time to Sell or Short HSY

The Hershey Company’s stock is in freefall, and the catalysts are now undeniable. Investors should:
1. Sell existing positions in HSY immediately to lock in gains or limit losses.
2. Consider shorting the stock, as the technical and fundamental backdrop suggests further downside.

The era of Hershey’s dominance in the confectionery market may be ending—and investors ignoring these signals risk being left behind.

This article is for informational purposes only and should not be considered financial advice. Always conduct your own research or consult a licensed professional before making investment decisions.