The Kraft Heinz Co (NASDAQ:KHC) shares are under pressure Wednesday after Berkshire Hathaway Inc (NYSE:BRK) (NYSE:BRK) filed to potentially sell its stake in the company. Here’s what you need to know.
Berkshire’s Intent: A Major Shift Ahead?
On Jan. 20, Kraft Heinz submitted a prospectus supplement to the SEC registering the potential resale of up to 325,442,152 shares held by Berkshire. The move comes from a 2015 Amended and Restated Registration Rights Agreement between Kraft Heinz, 3G Global Food Holdings and Berkshire Hathaway.
Berkshire now has the ability to sell its stake in the company if it chooses. Kraft Heinz would not receive any proceeds from such sales, and the company itself is not issuing new stock as part of the deal.
The possibility of Berkshire selling up to 325 million shares is weighing on investor sentiment, as a sale of that caliber could create meaningful selling pressure in the stock.
Navigating Kraft Heinz's Bearish Market Landscape
Kraft Heinz is currently positioned in a bearish setup, trading significantly below its key moving averages. Kraft Heinz is trading 6.3% below its 20-day SMA, 8.3% below its 50-day SMA, and 15.2% below its 200-day SMA, indicating a lack of upward momentum.
The RSI is currently at 46.56, which is considered neutral territory. This suggests that there isn’t strong buying or selling pressure at the moment, leaving traders in a wait-and-see mode regarding potential price action.
MACD is above its signal line, indicating some bullish momentum, but it's important to note that this could be short-lived given the overall bearish trend. Traders should watch for any shifts in momentum that might suggest a stronger move in either direction.
Key resistance is set at $26.00, and if Kraft Heinz’s stock approaches this level, it could signal a potential reversal or continuation of the current downtrend if it fails to break through. Conversely, without a clear support level identified, any further declines could lead to increased selling pressure.
Kraft Heinz has experienced a challenging 12-month period, down 24.07%. This longer-term trend reflects ongoing struggles and suggests that traders should remain cautious, as the stock is currently hitting new 52-week lows.
KHC Price Action: Kraft Heinz shares were down 5.81% at $22.39 at the time of publication on Wednesday. The stock is trading at a new 52-week low, according to Benzinga Pro.
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