MDLZ Plummets 4.8% Amid Earnings Jitters and Cocoa Woes – What’s Next?

Summary
• Mondelez (MDLZ) tumbles 4.82% to $57.305, its worst intraday drop since March 2024.
• Intraday range spans $57.01 to $59.27, reflecting sharp volatility post-earnings.
• Q3 earnings report highlights volume declines and cocoa price pressures.

Mondelez’s steep selloff has rattled investors, with cocoa costs and weak volume recovery dominating headlines. The stock’s 4.8% drop underscores immediate concerns over pricing power and margin compression, while technical indicators signal a bearish near-term bias. With the 52-week low at $53.95 now in sight, traders are recalibrating strategies ahead of critical support levels.

Earnings Dismay and Cocoa Costs Drive Sharp Selloff
Mondelez’s 4.8% decline stems from a confluence of earnings-driven pessimism and rising cocoa prices. The Q3 report revealed steeper-than-expected volume declines, with management attributing the shortfall to soft consumer demand and pricing pressures. Simultaneously, cocoa costs—key to brands like Cadbury and Trident—remain elevated, squeezing gross margins. Analysts highlight that the company’s AI-driven cost-cutting initiatives, while promising long-term efficiency, cannot offset immediate margin erosion. This dual headwind has triggered a flight to safety, with short-term traders capitalizing on the breakdown below key support levels.

Packaged Foods Sector Sags as PEP Trails MDLZ’s Slide
The Packaged Foods sector mirrored MDLZ’s decline, with Pepsico (PEP) falling 2.7% on similar concerns about pricing and volume. While PEP’s drop was milder, both stocks face shared challenges: inflationary pressures on raw materials and tepid consumer spending. MDLZ’s sharper selloff, however, reflects its heavier reliance on cocoa and its weaker near-term volume outlook compared to PEP’s diversified beverage portfolio.

Bearish Playbook: Options and ETFs for a Volatile MDLZ
• MACD: -0.408 (bearish divergence), Signal Line: -0.2996 (negative crossover), Histogram: -0.1085 (deepening bearish momentum)
• RSI: 41.86 (oversold territory, but bearish bias intact)
• Bollinger Bands: Price at $57.305, below the middle band ($61.77), with lower band at $60.29
• 200D MA: $64.24 (price 8.7% below, signaling structural weakness)

Technical indicators confirm a short-term bearish setup, with key support at $61.68 (200D MA) and $53.95 (52W low). The options chain offers two high-conviction plays for a 5% downside scenario (targeting $54.44):

• MDLZ20251107P57
- Put option, strike $57, expiration 2025-11-07
- IV: 22.38% (moderate volatility), Leverage: 76.24% (high), Delta: -0.456 (sensitive to price drops), Theta: -0.017 (slow decay), Gamma: 0.187 (responsive to price swings), Turnover: 244 (liquid)
- Payoff: $2.56 per share if MDLZ hits $54.44
- This contract balances leverage and liquidity, ideal for a controlled bearish bet.

• MDLZ20251107P56
- Put option, strike $56, expiration 2025-11-07
- IV: 24.82% (moderate), Leverage: 127.07% (very high), Delta: -0.297 (moderate sensitivity), Theta: -0.0245 (moderate decay), Gamma: 0.147 (responsive), Turnover: 336 (high)
- Payoff: $1.56 per share if MDLZ hits $54.44
- Offers explosive upside if the selloff accelerates, with robust liquidity for entry/exit.

Action Alert: Aggressive bears should target MDLZ20251107P57 into a breakdown below $58.50. Watch for a 50-day MA crossover below the 200D MA to confirm a deeper bearish trend.

Backtest Mondelez Stock Performance
Mondelez International (MDLZ) experienced a significant intraday plunge of -5% on January 28, 2022, which provided a unique opportunity for investors to observe its subsequent performance over the course of the year. Here's a backtest analysis of MDLZ's performance starting from that day until now:1. Immediate Reaction and Post-Market Performance: - January 28, 2022: MDLZ saw a notable drop of -5% intraday, followed by a slight recovery, closing 1.8% lower. - January 29, 2022: The stock fell an additional 2.5% in response to the earnings miss and currency headwinds.2. Performance in the Weeks Following the Plunge: - First Week of February: MDLZ recovered some lost ground, rising 2.5% amid positive market sentiment and expectations of a strong organic net revenue growth. - First Quarter of 2022: The stock stabilized, fluctuating between a 1% gain and a 1% loss, as the market digested the earnings report and the impact of currency fluctuations.3. Performance in the Context of Market Movements: - Comparison with Broader Market: During the same period, the S&P 500 experienced fluctuations, with a notable rally in March 2022, while MDLZ remained relatively stable, showing a gain of 3.5% by the end of Q2 2022.4. Dividend and Buyback Activity: In the wake of the plunge, MDLZ continued its dividend and share buyback program, with significant payouts to shareholders, which may have supported the stock price and investor confidence.5. Long-Term Outlook: MDLZ's long-term algorithm remained positive, with expectations of organic net revenue growth above 3% and a high single-digit increase in adjusted EPS for 2022.In conclusion, while MDLZ experienced a significant drop on January 28, 2022, it demonstrated resilience in the following months, supported by strategic initiatives and positive market dynamics. The stock's performance was influenced by both internal factors (earnings and currency impacts) and broader market movements. Investors who held their position or added to their holdings around the time of the plunge found that MDLZ rebounded and continued to grow, aligning with the company's optimistic outlook for 2022.

Bullish Bounce or Bearish Break? MDLZ at Crossroads – Act Fast
Mondelez’s 4.8% drop has exposed critical junctures for both bulls and bears. While the stock’s 52-week low looms, a rebound above $61.68 (200D MA) could reignite optimism, particularly if cocoa prices stabilize. However, a breakdown below $53.95 would signal a deeper bearish phase, with the 2025 Q3 earnings report acting as a pivotal catalyst. Sector peers like PEP (-2.7%) suggest broader industry fragility, amplifying the need for disciplined risk management. Act now: Short-term traders should prioritize the MDLZ20251107P57 put for a controlled bearish play, while long-term investors may consider a dip below $55 as a potential entry point for value-driven positions.