The Demise Of Papa John's Pizza
If you want to know how to do things right, read my post on Dominoes several weeks ago. But one can still learn how to do it right, by not doing what others did wrong.
John Schnatter, the founder and public face of pizza chain Papa John’s stuck his nose in the national anthem protests debate in the NFL, then indirectly blamed the league for Papa John’s slowing sales. To make matters worse, during May conference call, Schnatter was asked how he would distance himself from racist groups online. He responded by downplaying the significance of his NFL statement. “Colonel Sanders called blacks n-----s,” Schnatter said, before complaining that Sanders never faced public backlash.
It was said Schnatter was trying to convey his dislike for racism, but people found his words offensive…rightfully so. This was an example of using the wrong words, at the wrong time, in front of the wrong audience. This was an example of a public relations nightmare. Schnatter resigned and Laundry Service, their marketing agency dropped Papa John’s immediately.
The company reported that sales plummeted 10% in North America in July and now anticipates Papa John's North America sales will fall 7% to 10%, down from the previous prediction of a decrease of 3% to flat sales.
The company also plans to spend between $30 million and $50 million over the rest of the year on costs related to the scandal, including removing Schnatter from marketing materials and ads and legal costs.
Recently, I can across an article in which Jefferies, a Wall Street analyst co. said because Papa John’s lost a 33% of their value in three months, the sell-off was a buying opportunity and raised his price target from $52 to $58. I personally think touching this stock is playing with fire. Yes, we may get a pop in the stock as short sellers, who represent 20% of the float start buying back their shares, but I think there are better opportunities out there to risk capital.
However, my opinion doesn’t matter, so lets go to the charts.
Monthly Chart (Curve Timeframe) – the monthly supply zone is at $60 and the price is sitting in monthly demand at $40.
Weekly Chart (Trend & Entry Timeframe) – the trend is down. The chart suggest if the monthly demand at $40 holds and price closes above $44, price has a chance to move higher to the weekly supply zone at $54 with a second target at $62.
Trading is all about probability, but the chart also suggest is that the wick to the left of process denoted buyers stepped in at $44, further the supporting the case for the buyers that price may go much higher from these levels. However, as I said early, I think there are better opportunities to risk hard earned capital.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
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by rollandthomas
I'm indifferent to the topic. I hate how everything is political. He is an idiot but if the pizza and prices are good I'll buy.
I will take Dominoes pizza over Papa John's any day...it taste better and I can get $7.99 large with 3 topping:)
I prefer dominos reheated on a skillet the next day.
Schnatter handled this very poorly, as you point out. There are some things you just don’t say....regardless of how innocent your intentions. That said, it’s a shame that EVERYTHING is now political. Social media warriors, on both sides, are out to destroy anyone that voices an opinion they don’t agree with. People want...almost need a reason to show outrage and virtue signal.
Excellent comment and one I couldn't agree more with. It's a rotten world we live in with the main stream media and social media flagrantly pushing the conversation to such an extreme I wonder if anyone in the future will have an opinion let alone be able to voice it.
Well said.
Great comment, we live in a very different world today, the closer and the more access we have to people, the more careful our moves have to be.