Coca-Cola reported better-than-expected results. Why is its stock falling?

Coca-Cola reported second quarter results better than Wall Street expectations thanks to strong demand for sugar-free beverages. However, sales volumes declined in most regions except Europe, the Middle East and Africa. Against this backdrop, the company's shares sagged by almost 2%;

Coca-Cola's second-quarter 2025 earnings and revenue beat analysts' expectations. Adjusted earnings per share was 87 cents versus Wall Street forecasts of 83 cents, while comparable revenue rose 2.5% year over year to $12.62 billion versus expectations of $12.54 billion, CNBC reports citing LSEG data. 

The company achieved these results thanks to stable demand for sugar-free drinks and higher soda prices, noted Reuters. For example, sales of Coca-Cola Zero Sugar increased 14%, with all regions showing growth. The company alsoannounced a plan to launch a product in the Coca-Cola line based on U.S.-grown cane sugar - followingDonald Trump's announcement that the company had agreed to use "real" cane sugar as a sweetener instead of cheaper corn syrup. Food manufacturers began changing formulations and using healthier ingredients in response to U.S. Health Secretary Robert F. Kennedy Jr.'s Make America Healthy Again (MAHA) campaign, Reuters explains.

"Amid a changing external environment in the second quarter, our team was able to maintain focus and flexibility - helping us stay on track for the first half of the year," said Coca-Cola CEO James Quincy.

Coca-Cola has partially refined its full-year forecast: management now expects adjusted earnings growth of 3% relative to 2024 ($2.88 per share). Previously, the growth was expected to be in the range of 2-3%. The company also warned that the negative impact of currency exchange rates could reduce comparable net revenue by 1-2%. Additional pressure - by about 1% - could be created by M&A deals, asset sales and structural changes. Coca-Cola previously expected currency and other factors to reduce revenue by 2-3%, with management decisions exerting little additional pressure.

In trading on July 22, shares of Coca-Cola fell nearly 2% to $68.6. That marked their lowest since May 14, 2025. Still, the company's market value has risen nearly 12% since the beginning of the year. By comparison, the main U.S. stock index, the S&P 500, has added about 7% over the same period.

Despite better-than-expected earnings, investors sold the company's securities as Coca-Cola's sales declined in most regions, notes Barron's. Total worldwide sales in packages (case volumes) fell about 1% after rising 2% in the previous quarter. In Asia-Pacific, the decline was 3%, in Latin America 2% and in North America 1%. Meanwhile, sales in Europe, the Middle East and Africa rose 3%. Coca-Cola management has previously stated that economic uncertainty and geopolitical tensions undermine consumer confidence, which negatively affects sales in certain markets.

Like many other companies, Coca-Cola operates in a difficult consumer environment: consumers are cutting back on spending due to inflation and recession fears, Barron's notes. Adding to the pressure on sales has been the popularity of GLP-1-based weight loss drugs, which have reduced interest in sugary drinks. The industry is also under pressure from the Trump administration's "Make America Healthy Again" initiative, which brings with it new regulatory risks.

Despite deteriorating consumer sentiment and increasing regulatory pressure, Coca-Cola looks more resilient than other food industry players, Morgan Stanley analyst Dara Mohsenian emphasized in Barron's presentation. This is due to its broad product portfolio and global presence, which reduces reliance on weakness in the U.S. market. The US market brings about 40% of the company's total revenue.

This article was AI-translated and verified by a human editor