Some packages of Kraft Foods Group (KRFT) may contain small pieces of metal and the company launched a voluntary recall of approximately 6.5 million boxes of original flavor Kraft Macaroni & Cheese, so the company shares fell on Wednesday.
because a few were discovered to contain wire bristle pieces, Kraft faced a similar recall of about 137,000 cases of its Velveeta Shells & Cheese single-serve cups less than four years ago. The stock dipped for just a couple of days and then bounced back within weeks.
The company was aware of eight incidents in which consumers reported finding metal in the boxes have been no reports of injuries, Kraft Foods Group Inc. said
the company said that Consumers should return macaroni, and shouldn’t eat it, they also have to return it to the store where it was purchased for a full refund.
The big question is whether any damage will be lasting, while the share price has dropped about 2% since the announcement and the investors may fear the mistake, which has not caused any
reported injuries to date.
There were other companies have also experienced fairly quick stock price recoveries after product recalls like what happened in 2006, when a recall of more than 4 million Dell notebook batteries due to fire risk caused the tech company’s stock to dip and it rebounded again after just a few months.
In general, it’s unlikely for product recalls to have a long- term effect on company stock prices (or sales, for that matter).