Tupperware (NYSE:TUP) stock is catching a bid now, but should it be? Sensible investors need to put a lid on their enthusiasm over TUP stock before they end up on the wrong end of a pop-and-drop. I’m usually neutral when it comes to meme stocks, but I’m outright bearish on Tupperware stock, as the company isn’t in particularly good shape.
Based in Florida, Tupperware manufactures a variety of home-use products. However, we all know Tupperware for its plastic containers with the snap-on lids. I’ll admit, those containers are pretty good for keeping food fresh.
I’ll reiterate the message of journalist Brian Sozzi, who looked at a chart of TUP stock and wrote, “Not normal: Tupperware’s stock +350% in 5-days.” Personally, I think that Sozzi’s assessment of the situation is an understatement. If the stock doesn’t crash soon and wipe out millions of dollars of people’s wealth, I’ll be relieved and horrified at the same time.
Tupperware Earnings: Does it Matter at This Point?
Call it a sign of the times, if you will. Tupperware is set to report its quarterly earnings results in the coming days. However, eager financial traders just couldn’t wait until then. They pushed TUP stock up by nearly 40% today despite the lack of significant company-specific or broad-market news.
This is how the stock market is nowadays – exciting, yes, but sometimes irrational. This isn’t the first time stock traders loaded up on TUP without much justification. Back in April, Tupperware issued warning signals about its ability to continue as a going concern. Furthermore, Tupperware received a noncompliance notice from the New York Stock Exchange due to the company’s delayed annual Form 10-K filing.
Then, just a few days later, Tupperware stock jumped 18% based on nothing more than speculation that GameStop (NYSE:GME) Executive Chairman Ryan Cohen might take Tupperware over. We’re heading into early August now, and it’s evident that the Cohen-Tupperware talk was just an instance of the rumor mill at work.
I’m not suggesting that no one has any interest in Tupperware as a business. Interestingly, an SEC filing indicates that investment giant BlackRock (NYSE:BLK) has taken a financial interest in Tupperware. Whether this will develop into anything significant for Tupperware’s shareholders is anybody’s guess.
It’s hard to know what Blackrock’s management has in mind. Still, sensible investors should know better than to hold shares of Tupperware after the company acknowledged “substantial doubt about its ability to continue as a going concern.” It’s also worrisome that Tupperware is so late in filing its Form 10-K (we’re talking about 2022 here), that the company might not even complete this required task by September.
TUP Stock: Choose Certainty over Hope
In the world of meme stocks, certainty of facts isn’t always required. Sometimes, all it takes is the hope of a brighter future – meme dreams, if you will – to get a short squeeze going.
In Tupperware’s case, even after a delisting threat and the whole “going concern” warning, hope rings eternal, and Reddit rovers seek fast gains with TUP stock. Thus, Neil Saunders, managing director of retail at the GlobalData consultancy, observed “some optimism that a turnaround may be in progress and an investor has been found to help” Tupperware.
The savior could be Cohen or it could be anybody. Does it really matter anymore? Hopefully, at least some avid traders will heed the other part of Saunders’s message, which is that “there is no evidence of this being the case, so any optimism is based on hope rather than certainty.”
What’s certain (thanks to TipRanks’ online tools) is that Tupperware’s revenue has declined over time, and so has the company’s balance of cash, cash equivalents, and short-term investments. Also, Tupperware’s recent track record of quarterly EPS misses versus beats hasn’t been stellar.
At least, after the meme-stock rally, we can say that Tupperware will probably manage to achieve compliance with the New York Stock Exchange’s minimum market cap and share price requirements. How long that state of compliance will last, though, remains to be seen.
I wouldn’t consider Tupperware stock. There’s no concrete evidence that Cohen or anybody else will rescue Tupperware. BlackRock’s financial interest is notable but not a sufficient reason to invest in the stock.
I’m also not recommending betting against Tupperware stock, as the Reddit raiders could strike at any given moment. Still, I’m bearish overall and expect this story to have an unfortunate ending, which you don’t have to be part of.