Market value fluctuation is not new news - so why is everyone losing their minds over Coca Cola’s latest dip?

Earlier this week, Cristiano Ronaldo chose a bottle of water as his Euro 2021 press conference in place of a bottle of tournament sponsor Coca Cola’s finest. In theory, a professional athlete dismissing a sugary drink shouldn’t be controversial - in fact, it’s perhaps expected. In reality, the ‘snub’ claimed more media space than the football itself, as Ronaldo’s choice coincided with a dip in Coca Cola’s market value worth around $4billion.

People love a scandal, and media breeds media. Once the first headline directly linked Ronaldo’s action to one of the world’s most famous brands appearing to lose billions of dollars, it was only a matter of minutes before other publications followed suit. And whether you’re anti-capitalism, -sugar, -Coca-Cola, or just love a bit of dramatic clickbait - the story blew up. But is the most likely outcome deserving of that drama? Almost definitely not.

Causation or coincidence

Market values and share prices constantly fluctuate. Anything from time of day to a local election can (and will) have an influence. Equity analyst Nicholas Johnson suggested to the Insider that broader public interest in health and wellness has been creating  a greater “secular pressure”. This makes it a  greater value threat for Coca Cola than a one-off remark from a celebrity, however coincidental the timing.

That’s not to say big voices don’t make any difference at all. Take Elon Musk: last year, Musk questioned the high value of Tesla stock on Twitter. Share prices dropped significantly within 24hrs and stakeholders lost their shit - but was this attempt at stock democratisation, thinly disguised as self-sabotage, really that influential? No. Value crept back up, and dropped down again at the next controversial statement, and then back up, and then… The cycle continues.

Who decides what a brand is “worth”?

Valuation ultimately depends on perceptions and opinions of those doing the valuing. It’s not black and white; as we’ve seen above, not even the company CEO is guaranteed to agree with the perceived value in the market.

Trademark specialists Markable found a 254% difference between actual prices paid and estimated values of brands - meaning brands with market values of $500m were being bought for around $200m. With such a stark difference and inconsistent approach to value, you can’t help but question its validity.

Anyone for a Coke?

The importance of brands in people’s lives is often drastically exaggerated by those who have invested, financially or emotionally, in the brand. And who can blame them? For those of us working in communications, the hardest part of the job is coming to terms with the fact that our target audiences don’t sit around waiting to hear from us. The reality is that people’s perceptions of - and interactions with - a brand are unlikely to be swayed by a temporary blip in image. I’m sure I’m not the only person who wanted a McDonald’s the day after watching Super Size Me.

So next time a company “loses” a big lump of hypothetical cash because a celeb’s brand rejection makes the headlines, just sit back. Give it a week. And maybe have a Coke.