Why Kimberly-Clark (KMB) Stock Is Nosediving

What Happened?

Shares of household products company Kimberly-Clark (NYSE:KMB) fell 12.6% in the afternoon session after it announced a deal to acquire consumer health company Kenvue Inc. in a cash and stock transaction valued at approximately $48.7 billion. The deal involved both cash and stock, which meant that the ownership stake for existing Kimberly-Clark shareholders was set to be diluted; they were expected to own about 54% of the combined company. The market's harsh reaction also seemed tied to Kenvue's significant legal troubles. The maker of Tylenol and Band-Aid faced lawsuits, including allegations linking Tylenol to autism and legal action over talc cancer claims. These existing issues appeared to raise concerns among investors about the risks Kimberly-Clark was taking on. Adding to the uncertainty, an investor rights law firm launched an investigation into whether the merger was fair to Kimberly-Clark's shareholders.

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What Is The Market Telling Us

Kimberly-Clark’s shares are not very volatile and have only had 1 move greater than 5% over the last year. Moves this big are rare for Kimberly-Clark and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 3 months ago when the stock gained 4.8% on the news that the company reported mixed second-quarter results that featured the strongest sales volume growth in five years and an earnings-per-share figure that surpassed analyst expectations. Investors looked past a headline revenue figure that missed expectations, which the company attributed to recent business divestitures. Instead, market participants focused on a 3.9% rise in organic sales, a key metric that shows the health of the core business. This growth was fueled by the strongest increase in sales volume in five years, suggesting robust consumer demand. Furthermore, the company's adjusted earnings per share of $1.92 comfortably surpassed analyst forecasts. The strong underlying performance and profit beat signaled that the company's strategic plans found success.

Kimberly-Clark is down 20.8% since the beginning of the year, and at $103.40 per share, it is trading 29.9% below its 52-week high of $147.40 from March 2025. Investors who bought $1,000 worth of Kimberly-Clark’s shares 5 years ago would now be looking at an investment worth $763.95.

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