Anheuser-Busch InBev Stock Plummets: Here’s What Triggered the Crash

Another day, another corporate giant stumbles—Wall Street's favorite pastime.

The Sudden Drop

Anheuser-Busch InBev shares took a nosedive today, leaving investors scrambling for answers. No fancy jargon here—just a classic case of 'buy the rumor, sell the news' gone wrong.

Behind the Fall

While the original data's under wraps, the market's reaction screams louder than a trader on margin call. Was it earnings? Guidance? Or just another overleveraged hedge fund blowing up?

The Aftermath

Watch the suits spin this as a 'buying opportunity'—right after they've dumped their own shares. Cheers to that.

Image source: Getty Images.

Anheuser-Busch InBev Q2 earnings

Not all the news was bad. Anheuser-Busch InBev noted that actual revenue increased 3% year over year in Q2, and "normalized EBITDA" was up 6.5%, with EBITDA margins expanding to 35.3%. Reported revenue, however, was hurt by unfavorable currency exchange rates, meaning a weak U.S. dollar. That depressed real revenue growth to just 2.1%.

The company said its "underlying profit" grew 7.7% to $1.95 billion, and underlying earnings per share grew 8.7% as the company bought back stock in the quarter. At Anheuser-Busch InBev, "underlying profit" basically translates as non-GAAP (adjusted) earnings, however -- and investors are treating the numbers as such.

Anheuser-Busch doesn't make it easy to figure out what its actual earnings as calculated according to generally accepted accounting principles (GAAP) were, but according to data from S&P Global Market Intelligence, they were only $0.82 per share.

Is Anheuser-Busch InBev stock a buy?

And now you see why investors are upset. Whatever the "underlying" or "normalized EBITDA" numbers say, Anheuser-Busch InBev's actual profit for Q2 was 16% lower than the headline number.

Granted, the stock doesn't look too expensive at just over 18 times earnings. But analysts only see the stock growing earnings at 12.5% over the next five years -- and right now, earnings are heading in the opposite direction, not growing, but shrinking.

And with a trend like that, it's hard to call the stock a buy.