Boston Beer Company stock (NYSE: SAM) has dropped more than 12% in just the last one month and currently trades at $959. This drop was mainly due to fear of hard seltzer’s growth having peaked as of now. Hard seltzer has been growing at triple-digits over the last several years and continued this impressive growth even during the pandemic. Hard seltzer’s popularity has caused many new brands to flood the market, but Mark Anthony Brands’ White Claw and Boston Beer’s Truly dominate the seltzer segment with over 70% combined share. This growth in the category led to a sharp rally of 30% in SAM’s stock between January and April 2021. However, since then the stock has been declining due to some analysts believing that hard seltzer growth has peaked, which has led to a couple of hedge funds reducing their exposure to SAM stock. As consumers were locked in their homes, they stocked up on hard seltzer and other alcoholic beverages, leading to the robust sales growth. But now, as consumers are heading out to bars and restaurants again, hard seltzer doesn’t have nearly as much on-premise traction as it does at packaged goods stores and the like. This has driven SAM’s stock down 12% over the last month.
But will Boston Beer’s stock continue its downward trajectory over the coming months, or is a recovery in the stock more likely? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data for the last ten years, returns for SAM stock average close to 6% in the next one-month (21 trading days) period after experiencing a 12% drop over the previous one-month (21 trading days) period. But how would these numbers change if you are interested in holding SAM stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning to test SAM stock chances of a rise after a fall and vice versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!
MACHINE LEARNING ENGINE – try it yourself:
IF SAM stock moved by -5% over five trading days, THEN over the next 21 trading days, SAM stock moves an average of 3.3 percent, with a 57% probability of the stock giving positive return in the next one month.
Some Fun Scenarios, FAQs & Making Sense of SAM Stock Movements:
Question 1: Is the average return for Boston Beer Company stock higher after a drop?
Answer:
Consider two situations,
Case 1: Boston Beer Company stock drops by -5% or more in a week
Case 2: Boston Beer Company stock rises by 5% or more in a week
Is the average return for Boston Beer Company stock higher over the subsequent month after Case 1 or Case 2?
SAM stock fares better after Case 1, with an average return of 3.3% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 3.2% for Case 2.
In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.
Try the Trefis machine learning engine above to see for yourself how Boston Beer Company stock is likely to behave after any specific gain or loss over a period.
Question 2: Does patience pay?
Answer:
If you buy and hold Boston Beer Company stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.
Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!
For SAM stock, the returns over the next N days after a -5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:
Question 3: What about the average return after a rise if you wait for a while?
Answer:
The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although SAM stock appears to be an exception to this general observation.
SAM’s returns over the next N days after a 5% change over the last 5 trading days is detailed in the table below, along with the returns for the S&P500:
It’s pretty powerful to test the trend for yourself for Boston Beer Company stock by changing the inputs in the charts above.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
