SJM Plunges 5% as Tariff Woes and Coffee Slump Trigger Investor Exodus

Summary
• The J. M. Smucker (SJM) fell 5% to $105.07, its worst intraday drop in over a year.
• Q1 net loss of $0.41/share and 22% coffee division profit decline exposed tariff-driven margin pressure.
• Guidance for 3–5% sales growth amid $134M divestiture impact highlights sector fragility.

The stock’s sharp selloff reflects a perfect storm: Trump-era tariffs crushing coffee margins, elevated commodity costs, and a $867M goodwill impairment in the Sweet Baked Snacks segment. With the 52-week low at $93.3, the 5.9% intraday range ($100.25–$106.75) underscores extreme volatility as investors weigh near-term risks against long-term guidance.

Coffee Tariffs and Cost Pressures Sink Smucker’s Q1 Outlook
The 5% selloff stems directly from Smucker’s Q1 earnings report, which revealed a 22% profit decline in its U.S. retail coffee division. A 50% tariff on Brazilian coffee imports—combined with higher commodity costs and aggressive marketing spend—eroded margins. Management confirmed 'additional price increases in early winter' to offset tariffs, but the immediate hit to Q1 results (GAAP net loss vs. $1.74 EPS last year) spooked investors. The $134.7M divestiture drag and $38M contract manufacturing loss in pet food further clouded the outlook, despite raised full-year sales guidance.

Beverages—Non-Alcoholic Sector Mixed as Coca-Cola Gains
The Beverages—Non-Alcoholic sector, led by Coca-Cola (KO) with a 0.03% intraday gain, shows divergent trends. While Smucker’s coffee division struggles with tariffs, KO’s stable pricing and global distribution buffer it from such shocks. However, Smucker’s 3–5% sales growth guidance aligns with sector norms, suggesting structural challenges in coffee retailing rather than a broader sector collapse.

Options and ETFs Highlight Short-Term Volatility Play
• MACD: 1.31 (bearish divergence from 1.53 signal line)
• RSI: 56.5 (oversold territory with potential rebound)
• Bollinger Bands: $107.61–$114.12 (current price near lower band)
• 200D MA: $109.75 (price below key support)

Technical indicators suggest a short-term oversold condition, with the 200-day MA acting as resistance. The 52-week low at $93.3 offers a potential floor, but near-term volatility remains high. No leveraged ETFs are available for SJM, but options provide direct exposure.

Top Options Contracts:
• SJM20250919P105 (Put, $105 strike, 9/19 expiry):
- IV: 21.80% (moderate)
- Leverage: 47.84% (high)
- Delta: -0.4686 (moderate sensitivity)
- Theta: -0.0361 (rapid time decay)
- Gamma: 0.0674 (high sensitivity to price swings)
- Turnover: $170,720 (liquid)
- Payoff (5% down): $10.07 (max $10.07 profit).
This put offers asymmetric upside if the stock breaks below $105, leveraging high gamma and leverage ratio for a 5% downside scenario.

• SJM20250919P110 (Put, $110 strike, 9/19 expiry):
- IV: 21.22% (moderate)
- Leverage: 19.49% (moderate)
- Delta: -0.7799 (high sensitivity)
- Theta: -0.0112 (slow decay)
- Gamma: 0.0513 (moderate sensitivity)
- Turnover: $443,381 (highly liquid)
- Payoff (5% down): $5.29 (max $5.29 profit).
This deeper-in-the-money put provides directional protection with lower gamma but higher delta, ideal for a prolonged bearish move.

Action: Aggressive short-sellers should prioritize SJM20250919P105 for its high leverage and gamma, while conservative bears may pair SJM20250919P110 with a stop above $110.58 (previous close).

Backtest The J. M. Smucker Stock Performance
After an intraday plunge of -5%, the stock SJM has historically shown mixed short-to-medium-term performance. The 3-day win rate is 52.43%, the 10-day win rate is 57.62%, and the 30-day win rate is also 52.43%. While there is a slight positive return in the immediate aftermath of the event, the overall performance is relatively muted, with a maximum return of only 0.75% over 30 days.

Bullish Guidance Amid Bearish Near-Term Pressures
The 5% selloff is a short-term reaction to tariff-driven margin compression, not a fundamental collapse. Smucker’s 3–5% sales growth guidance and $8.50–$9.50 EPS target remain intact, supported by price hikes and cost discipline. However, the $134.7M divestiture drag and $38M contract manufacturing loss in pet food highlight structural fragility. Investors should watch for a rebound above $110.58 (previous close) to validate the bull case, while the sector leader Coca-Cola (KO, +0.03% intraday) offers a safer proxy for long-term exposure. Act now: Buy SJM20250919P105 for a 5% downside bet or wait for a $100.25 support test before initiating longs.