Tupperware Brands, known for its iconic food storage containers, experienced a major boost in its share price on Friday, with a surge of 44%. This followed a debt restructuring deal that helped alleviate concerns about the company’s future.
Back in April, Tupperware raised doubts about its ability to continue as a going concern, as its sales had taken a hit. However, the company managed to strike an agreement with its lenders to reduce or reallocate cash interest and fees. This deal not only helped ease its financial burdens, but also gave Tupperware immediate access to a revolving borrowing capacity of $21 million.
Market analyst Bartosz Sawicki sees this agreement as a lifeline for Tupperware. However, he warns of a challenging market environment that the company will continue to face. Despite experiencing a surge in demand during the lockdown, Tupperware has since seen a decline in sales volumes.
Interestingly, Tupperware has gained attention from retail traders, resulting in a 449% share surge over the last three weeks. The company ranked as the fourth most discussed stock on investor-focused social media platform Stocktwits. Additionally, it was the seventh most traded stock by retail investors, according to J.P. Morgan data. These share gains resemble the rallies seen with “meme stocks,” where retail investors coordinate their actions on social media.
Analytics firm Ortex estimates that 30.8% of Tupperware’s publicly available shares were shorted, resulting in significant losses for bearish investors. This short-selling activity contributed to the company’s market capitalization dropping to $156.56 million on Thursday, representing an 87% loss in value since the end of 2020.
Interestingly, Tupperware was not the only company experiencing gains on Friday. Other meme stocks, such as Yellow and American Superconductor Corp, also saw their share prices rise.
Overall, Tupperware’s share surge following the debt restructuring deal provides some much-needed relief for the company. However, it will need to navigate the challenging market environment and continue to adapt to changing consumer preferences in order to secure its long-term viability.
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