Whole Foods Market, Inc. (NASDAQ: WFM)
Whole Foods market is having an incredibly rough day in the market, following up on declines that we saw on the stock yesterday. The reason for the drop is clear; the company received a warning letter from the United States FDA with regard to one of its largest plants. Today, we’ll talk about the warning letter, how the market reacted to the news, and what we can expect to see from WFM moving forward.
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WFM Receives Concerning Letter From FDA
As mentioned above, Whole Foods Market has had a rough time in the market over the past two trading sessions, and for good reason. The company has been declining as a result of a United States Food and Drug Administration letter that was issued to warn the company. According to the release, the letter cited serious violations when it comes to regulations associated with packaging, manufacturing, and storing food at one of the company’s largest plants.
At the Massachusetts WFM plant, the FDA found severe food-safety violations, along with listeria. The letter said that it had found ready-to-eat pesto pasta and ready-to-eat mushroom quesadillas mixed and prepared in areas of an assembly room. It noticed that, in these areas, condensation from ceiling joints fell directly onto the surfaces below, including the ready-to-eat foods.
On top of that, the FDA said that it saw an employee spraying ammonium sanitizer near an open colander of salad, as well as other worker infringements. For example, one employee was seen packaging ready-to-eat foods without washing their hands or changing gloves. In their letter, the FDA gave WFM 15 days to fix the safety issues found in the plant, offering the following comment:
“The FDA has serious concerns that our investigators found your firm operating under these conditions…”
How The Market Reacted To The News
One of the first things we learn as investors is that the news moves the market. When positive news is released with regard to a publicly-traded company, we can expect to see gains in the value of the stock associated with the company. However, the news that was released with regard to Whole Foods Market was anything but positive. As a result, we’re seeing an overwhelmingly negative reaction in the market. Following up on dramatic declines seen during yesterday’s trading session, WFM continues to fall. Currently (12:32), the stock is trading at $31.16 per share after a loss of $1.36 per share, or 4.17%, thus far today.
What We Can Expect To See Moving Forward
Although this may surprise you, I’m seeing an incredible opportunity here. The truth is that the news surrounding WFM is indeed overwhelmingly negative. This will cause the stock to continue falling in the short run. However, I don’t see Whole Foods Market ignoring the warning letter. I’m expecting that the company will address the food-safety violations and pass the inspection with flying colors in 15 days. Buying at support and taking advantage of the overwhelmingly bullish activity that will follow will likely lead to great gains.
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What Do You Think?
Where do you think WFM is headed moving forward? Join the discussion at TalkTRENDZ from CNA Finance!
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