As Its Snack Prices Fall, PepsiCo's Stock Is Rising
Key Points
PepsiCo revenue increased 8.5% in the first quarter of 2026.
Activist investor Elliott Investment Management pushed PepsiCo to reduce the retail cost of many brands after prolonged price hikes.
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Over the last few years, PepsiCo (NASDAQ: PEP) has raised prices on its snack product line to help maintain margins amid rising production costs, particularly during the pandemic. Consumers finally started pushing back, and PepsiCo saw sales start to decline. Because of this and a few other reasons related to inventory management, PepsiCo's stock price fell by over 15% through 2024 and 2025.
Activist investor Elliott Investment Management saw this price drop as an opportunity to buy into the stock and then convince management to initiate efforts that might bring customers back and improve PepsiCo's performance. In September 2025, Elliott acquired a $4 billion stake in PepsiCo and began pushing the beverage and snack company to improve operations. Specifically, it advised the company to slash the prices of brands such as Lay's, Doritos, Cheetos, and Tostitos by up to 15% to lure back snack-loving consumers.
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PepsiCo's management may have been pressured into some of its recent actions, but following the directives appears to be paying off. PepsiCo's first-quarter 2026 revenue increased 8.5% year over year, and operating profit rose 24%. In its earnings release, the company's Chairman and CEO, Ramon Laguarta, told investors, "An extensive commercial agenda, which includes the staging of large global brands, innovation activity, and certain affordability initiatives, is being executed well and business performance improved."
PepsiCo management has reaffirmed its full-year guidance and expects organic revenue to increase 2% to 4%, while returning nearly $9 billion to shareholders through stock buybacks and dividends.
PepsiCo's stock is up nearly 10% this year and maintains a solid dividend yield of 3.59% as of this writing on April 17. The iconic beverage company appears to be in full turnaround mode. Investors will be snacking on this good news in the long term.
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Catie Hogan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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