Tupperware Brands stock has experienced a remarkable surge of over 700% in the past two weeks, leaving many puzzled about the cause. However, the upcoming earnings report, scheduled for Wednesday, might shed some light on this unexpected rally.
On Tuesday, Tupperware (ticker: TUP) stock recorded a 16% climb, reaching $4.95. This marks the highest closing price for the stock since November 2022, as reported by Dow Jones Market Data. Notably, the brand’s share value hit a low point of 62 cents per share on July 18.
The surge in Tupperware’s stock comes without any significant positive developments from the company. In fact, prior to the July rally, Tupperware shares had already fallen by 85% this year, up until July 18.
So, what exactly is driving the recent surge in the stock? Similar to previous instances involving GameStop (GME), Bed Bath & Beyond, and AMC Entertainment Holdings (AMC), retail traders have flocked to Tupperware’s stock. Their trading activity, coupled with other investors taking short positions or betting on its decline, has fueled the upward trajectory.
Based on data from S3 Partners, Tupperware currently has a short interest as a percentage of float at 30.1%, with the figure standing at 27.9% during its closing low in July.
Meme traders, in an effort to squeeze institutional short sellers, join forces to purchase struggling shares of well-known companies characterized by volatile stock movements and heavy short interest. A recent example includes meme traders buying up shares of Bed Bath & Beyond right before the company officially filed for bankruptcy.
Before the extraordinary surge in Tupperware’s stock, investors had concerns regarding the company’s future. In an April filing with the Securities and Exchange Commission, Tupperware expressed doubt about its ability to continue as a going concern.
This concern followed Tupperware’s preliminary operating results for the fourth quarter, which were announced in March. The company reported an 18% decline in sales for 2022 compared to the previous year. Since then, Tupperware has not released any quarterly results.
As of now, the company has not responded to requests for comment.
In response to its challenging circumstances, Tupperware announced on April 7 that it was collaborating with financial advisors to bolster its capital structure and position the business more positively.
Tupperware Faces Challenges Amidst Changing Market
The recent announcement by Tupperware on June 7 revealed their noncompliance with the New York Stock Exchange’s listing requirements. According to the notice, Tupperware’s global market capitalization and stock price fell below the required thresholds over a consecutive 30-trading day period.
Tupperware is expected to report its second-quarter earnings on Wednesday, as per FactSet. However, attempts to confirm the release date with the company have been unsuccessful. In a recent filing with the SEC, Tupperware stated its intention to file its quarterly report by late September 2023. Nevertheless, there is no guarantee that the company will meet this deadline.
Investors eagerly anticipate Tupperware’s upcoming results to assess progress in improving its capital structure and overall business model. Bruni explained that this update will determine whether the current positive sentiment surrounding the stock aligns with the company’s underlying performance.
Bruni expressed doubts about Tupperware’s ability to satisfy investors’ expectations for the future. He believes that the company’s long-standing structural issues are unlikely to have been resolved in the past quarter.