It’s all there again: a company is on the ground, speculators are betting on its bankruptcy, but suddenly it rises as if from ruins. The share price starts to rise, mostly young people encourage themselves to buy on the Internet, within a few days the price reaches such high levels that investors ask themselves: What’s going on? Or to put it in the words of MisterMatty5 on the internet forum Reddit: “Why is Tupperware pumping so hard?”
How is it possible that the share price of a company that previously seemed completely out of fashion can explode? Tupperware, the manufacturer of plastic food storage boxes, which in the post-war period from America began its triumphant advance in the western world with a special sales model: there was a housewife in almost every town who invited neighbors to Tupper parties. And that’s where Aunt Irma from Unna stocked up on the practical, watertight bowls in which potato salad and soup could be kept fresh because you could let the air out of them with a pffffft.
In the last few years, however, things have not gone well. The plastic bowls got a grandma image, especially since the younger generation rejects plastic for climate protection reasons. The Corona period then gave the company the rest: If people are no longer allowed to meet, there will be no more Tupper parties. The business model collapsed. In the spring, boss Miguel Fernandez announced horrific numbers. There were accounting discrepancies, he even expressed doubts as to whether business activities could be continued. The share price, at the best of times at more than 70 euros, fell to less than one euro.
The ideal time to bet on further price declines
Since then Tupperware has been rumored to be bankrupt. It’s the ideal time for punters to bet on another fall. This is possible via so-called short sales: An investor sells shares that he does not own but borrows; later he has to buy these shares. If the price falls in the meantime, he makes a profit – often a very large profit, because a share price can quickly halve at such a low level.
According to data from the New York Stock Exchange, a quarter of all existing shares in Tupperware were sold short in July. Huge speculation ran against the company. And then something happened that you already knew from January 2021: Gamestop, a US chain of stores for computer games, was ailing because everyone was only buying online. The share price on the ground, a huge number of short sales – but then a new phenomenon sets in on the Internet. Spurred on by experts on platforms like Reddit, more and more investors are buying the stock. The price starts to rise, and then a technical effect kicks in: the short sellers, often billionaire hedge funds, have to eventually cash their bets and buy the shares, which drives the price up further. Within a few days, the Gamestop course climbed 30-fold. In the end, hedge funds lost $11 billion. The Internet community celebrated it as a victory against the evil speculators.
It is similar again with Tupperware, albeit not to such an extent: the share price started to rise about a week ago, within a few days it climbed from 0.55 to 5.23 euros, so it has increased almost tenfold.
The comments on the Internet platform Reddit are similar: the young investors cheer each other on. “Up to the moon” – let’s go to the moon, is a phrase that is often used. “Get them all. It went from 2.56 to 3.03 in just 20 seconds!!!!!!!!,” writes user Due Surprise3597.
Can Tupperware justify the huge price increase?
The crucial question remains, however, whether Tupperware can justify the huge price increase. To do this, the company would have to find a successful business model again. And nothing indicates that. There are also such voices on Reddit: “Dining business model, I definitely keep my distance from it,” writes user timbow556. “Sales channels are full in 2002, I still have the Tupperware boxes that my grandmother bought from her friend Elisabeth at the Tupperware party in 1985, why should I buy new ones?”
Recently, Tupperware shares also went down, on Thursday they were listed at 3.38 euros. The biggest hype seems to be over, but you never know for sure. The price of the Gamestop share is quoted at around 20 euros today and is therefore still well above the level before the hype began. In any case, the signal to all speculators is clear: In the age of social media, you have to be more careful when betting against a stock.