Shares of beer maker Anheuser-Busch InBev (NYSE:BUD) are down into oversold territory with a Relative Strength Index (RSI) of less than 30. RSI is a momentum indicator that tells investors when there has been an excess of selling or buying. When it's at the lower end of the gauge, at below 30, that's a sign that there's been a lot of selling recently.
Anheuser-Busch InBev hasn't released horrible earnings numbers but instead the downfall has been tied to the controversy surrounding Bud Light and a recent marketing campaign that has caused the ire of some of its loyal consumers. After partnering with a transgendered influencer, some customers accused it of "going woke," leading to boycotts of the brand. Sales have been down significantly since that has happened, and the stock is also plummeting.
Boycotts, while problematic in the short term, typically don't cause long-term issues for a company. But even with that in mind, the stock hasn't become a bargain just yet. At 20 times estimated future earnings, it could very well go lower than where it is right now. The recent weakness in beer sales also suggests that its next quarterly results may be underwhelming, leading to another potential selloff of the stock in the months ahead.
Anheuser-Busch InBev may struggle this year but investors shouldn't be too quick to count out the business as a long-term investment. However, I wouldn't buy it just yet as the worst could still be to come for the stock once its results for the next quarter or two arrive.
