If the recent events surrounding Cracker Barrel have taught us anything, it’s that investors need to incorporate corporate wokeness into their risk assessment strategies. This emerging trend highlights how woke culture can significantly impact a company's market performance, perhaps even as much as traditional economic indicators like interest rates and inflation. The ongoing backlash against companies like Bud Light and Target, both of which faced severe public backlash due to their alignment with progressive ideologies, serves as a crucial reminder for investors.
Wokeness is often characterized by adherence to left-wing ideologies that address race, gender, and cultural issues, often at the expense of broader public appeal. Unfortunately, many corporate leaders seem disconnected from the sentiments of everyday Americans, failing to recognize the growing disdain for progressive indoctrination. This disconnect is evident in their marketing strategies, which often alienate potential consumers who simply wish to enjoy their products without political undertones.
Shareholders should actively voice their concerns regarding this trend during annual meetings, earnings calls, or through direct communication with investor relations. It is essential for corporate executives to understand the ramifications of intertwining wokeness with corporate decision-making.
Some savvy investors on Wall Street are beginning to factor in “woke risk” into their financial models, although they may not refer to it by that name. Bob Sloan, the founder of S3 Partners and co-host of the “Risk and Return” podcast, has been closely monitoring Cracker Barrel’s stock for signs of significant movement. Despite being a well-established restaurant chain known for its country-style cuisine, Cracker Barrel's recent branding decisions have drawn scrutiny.
With a market capitalization of around $1.2 billion, Cracker Barrel's stock was recently categorized as a “battleground stock” by Sloan due to the evenly split sentiment among active long and short investors. This indicates that any significant event could lead to a substantial shift in share prices. Just recently, Cracker Barrel unveiled a new logo—removing the beloved character Uncle Herschel—which was perceived as a move toward a woke identity. This rebranding decision resulted in a nearly $100 million loss in market value almost immediately.
The lesson here is clear: if a company is planning a rebranding, especially in a polarizing climate with divided investor sentiment, it may be wise to reconsider the timing and approach. As discussed in my book, “Go Woke Go Broke; The Inside Story of the Radicalization of Corporate America,” the pressure to adopt a woke image often overrides the potential risks associated with such decisions. Marketing teams are frequently eager to chase the latest trends, even if it means alienating existing customers.
In a statement to The Post, Cracker Barrel acknowledged that Uncle Herschel hasn’t been completely removed from their offerings, asserting that their core values remain intact. However, the investor community has already reacted negatively, illustrating how a company's cultural positioning can lead to significant financial repercussions.
In contrast to Cracker Barrel, American Eagle has recently navigated similar market dynamics without embracing a woke rebranding. Instead, the jeans retailer opted for a more traditional marketing approach by featuring Sydney Sweeney in their advertising campaign. This decision resonated well with consumers and investors alike, resulting in a 20% increase in stock value in the month following the ad's release. This case underscores the potential benefits of aligning corporate messaging with mainstream values rather than progressive agendas.
For those in the investment community, it is crucial to keep the phrase “Go Woke, Go Broke” at the forefront of their decision-making process. This simple reminder can serve as a guide for evaluating corporate strategies and their potential impact on financial performance. Investors must continue to hold corporate leaders accountable for their choices and ensure that wokeness does not compromise long-term profitability.
