Hershey Stock Is the Worst Performer in the S&P 500 Today. Investors Are Mixed on the Outlook.

A robotic machine moves boxes of chocolate on pallets for shipment at the Hershey Co. factory in Hershey, Pa. (Ryan Collerd/Bloomberg)

Hershey stock is falling on Wednesday, one day after it named Wendy’s Chief Executive Officer Kirk Tanner as the new head of the snack and candy company.

The stock tumbled 4.7% on Wednesday to $162.01, on pace for the lowest closing price since June 6, and the largest daily percent decrease since March 12. It’s the worst performer in the S&P 500 on Wednesday. Shares declined 3.7% on Tuesday.

Before joining Wendy’s, Tanner spent over three decades at PepsiCo and served as the CEO of the firm’s North America beverage business from January 2019 to February 2024, where he oversaw a portfolio of popular brands like Pepsi, Gatorade, and Pure Leaf.

The new CEO has brought clarity to one of Hershey’s major uncertainties, wrote Mizuho analyst John Baumgartner on Wednesday. Tanner’s background in consumer packaged goods, brand building, innovation, and customer partnerships “strongly align with Hershey’s needs” and provides “an encouraging foundation for new perspectives,” wrote the analyst.

Baumgartner expects Hershey to keep its strategic focus on consumer segmentation and customer partnerships. He believes the firm’s long-term outlook—2% to 4% net sales growth and 6% to 8% earnings growth—to stay the same, but notes that Tanner might initiate more brand-building investments.

But the selloff in Hershey stock since Tuesday suggests investors’ view on the news is mixed as they “balance Tanner’s significant industry experience versus a somewhat uneven track record during his time at PepsiCo from a market share perspective,” wrote UBS analyst Peter Grom in a Wednesday note.

Hershey is facing many headwinds including rising cocoa prices, potential tariffs costs, and souring consumer appetite for snacks. In the first quarter ended March 31, the company reported adjusted earnings per share of $2.09, down 31.9% from a year ago. Revenue slipped 13.8% to $2.81 billion from the year prior.

Things aren’t expected to improve any time soon. Management projected a 30% dip in earnings per share for the first half of the year, and estimated a 40% decrease for the second half. Hershey is expected to release its second-quarter sales and earnings results on July 30 before the market opens.

Despite the weaker earnings, Hershey shares have performed relatively well compared with other big players in the packaged food industry. As of Wednesday, the stock is down 4.4% year to date. Campbell’s and General Mills have dropped 26% and 20%, respectively.

Amid the challenges, Hershey has switched many of its top executives this year. Stacy Taffet was named chief growth officer in March. Andrew Archambault and Veronica Villasenor were appointed to lead the firm’s North American confectionery and salty snacks departments, respectively, in January.

Baumgartner noted some positive signs: Hershey’s candy business recently returned to market share growth again, while declines in chocolate volume are moderating. Still, stubborn cocoa inflation, tariffs, and recent wellness trends added more uncertainties to the company’s future performance, wrote the analyst.

Write to Evie Liu at evie.liu@barrons.com