Mondelez Shares Plunge 3.9% Amid Margin Compression and Guidance Cut as $1.21B Volume Ranks 94th

Market Snapshot

Mondelez International (MDLZ) experienced a significant decline in its stock price, falling 3.92% on October 29, 2025, despite a notable increase in trading volume. The company’s shares saw a daily trading volume of $1.21 billion, a 31.14% rise compared to the previous day, ranking 94th in dollar volume among U.S.-listed stocks. This performance reflects heightened investor activity and sentiment shifts following the release of third-quarter earnings and revised guidance.

Key Drivers

The third-quarter earnings report for Mondelez underscored a mix of revenue growth and earnings pressures that contributed to the stock’s sharp decline. While the company reported revenue of $9.74 billion, a 5.9% year-over-year increase and exceeding market expectations, organic growth slowed to 3.4% from 5.6% in the prior quarter. This deceleration was attributed to a 4.6% decline in volume/mix, particularly in North America and Europe, where consumer price sensitivity and competitive dynamics dampened demand. The adjusted earnings per share (EPS) of $0.73 marked a 23% year-over-year decline, missing investors’ concerns about margin compression.

A critical factor driving the stock’s performance was the sharp contraction in gross margins. Mondelez’s gross margin fell to 30.4%, a 10-percentage-point decline from the prior year, significantly below market forecasts. The company attributed this to surging cocoa prices, which reached record highs during the quarter, as well as elevated transportation costs. These input cost pressures outpaced pricing actions, compressing profitability and eroding confidence in the company’s ability to maintain margins. Management acknowledged that cocoa costs had peaked in Q3, but the damage to near-term earnings was already evident.

The earnings report also featured a significant downgrade in full-year guidance, further exacerbating investor concerns. Mondelez withdrew its prior 5% organic revenue growth target, instead projecting 4% growth for 2025. Additionally, adjusted earnings are now expected to decline by 15% at constant currency, widening the gap from the previously anticipated 10% decline. These revisions signaled management’s acknowledgment of ongoing challenges in key markets and underscored the company’s vulnerability to macroeconomic headwinds, including inflationary pressures and shifting consumer behavior.

The market’s negative reaction to the earnings report was compounded by management’s cautious outlook for 2026. While executives highlighted early signs of cocoa price stabilization and improved crop forecasts, they emphasized the need for strategic investments to restore volume growth and enhance cost efficiency. These included increased spending on premium and “better-for-you” product segments, as well as targeted promotional strategies to counter price elasticity in Europe. However, investors remained skeptical about the timeline for margin recovery, particularly given the company’s current liquidity metrics, including a current ratio of 0.64 and a quick ratio of 0.39, which suggest limited flexibility to absorb further cost shocks.

Analyst sentiment and technical indicators further reinforced the bearish outlook. The stock’s price-to-earnings ratio of 22.05, while within historical ranges, contrasted with a P/S ratio near a 10-year low, reflecting undervaluation concerns. Institutional ownership at 84.07% indicated strong confidence from large investors, but the Altman Z-Score of 2.4 placed Mondelez in the “grey area” of financial stress, heightening risk perceptions. Additionally, the RSI of 47.69 and declining moving averages suggested the stock was trading near its lower range, potentially signaling a continuation of downward momentum in the near term.

The cumulative impact of these factors—revenue growth outpacing earnings, margin compression, guidance downgrades, and macroeconomic uncertainties—resulted in a sharp sell-off. Mondelez’s shares fell nearly 6% in after-hours trading, erasing early gains and reflecting the market’s prioritization of margin stability over top-line growth. While management expressed optimism about long-term recovery through pricing strategies and cost efficiencies, the immediate outlook remains clouded by persistent input cost volatility and the need for structural adjustments to regain volume traction in key markets.