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PepsiCo stock soars as high-profile ad spending delivers strong 3Q results

Published: 11:15 03 Oct 2019 EDT

Bottles of Pepsi
Pepsi posted revenue of $17.19 billion, easily surpassing estimates of $16.93 billion

PepsiCo Inc (NASDAQ:PEP) saw it shares surge Thursday even amid an widespread market drop after the company beat third-quarter earnings and revenue estimates thanks in part to an aggressive ad blitz. 

The food and beverage giant ramped up advertising spending by 12% this year on campaigns for its Pepsi colas, Mountain Dew, Gatorade and other products, according to a report from Reuters.

The company has partnered up with stars like Chrissy Tiegen, and recently launched a campaign in conjunction with the 100th anniversary of the NFL.

Investors responded strongly, boosting Pepsi shares 3.2% to $138.16 in morning trade.

READ: October plunge by US blue-chips tops 1,000 points as dire services report adds to worries over US economy

“The increased advertising that we have is causing consumers to shop us more aggressively, and our customers are rewarding us with that [grocery] space because they know that we can help them grow,” CFO Hugh Johson said on CNBC.

The company posted earnings of $1.56 per share on revenue of $17.19 billion, easily surpassing estimates of $1.50 per share and $16.93 billion, respectively.

Pepsi’s healthier options noticeably did well, including sugar-free Gatorade Zero, which topped $500 million in retail sales since launching in May. 

In addition, Johnson expects Bubly — a sparkling water competitor to La Croix — to become the company’s next $1 billion brand. 

Overall, North America beverage sales rose 3.4% to $5.64 billion.

Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com 

Follow him on Twitter @andrew_kessel

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